CPIL releases complete set of briefs and counter lodged in writ filed at Hon'ble Supreme Court of...
352
description
Since the case at SC has become infructuous, CPIL releases this complete document, which can be hosted at scribd permanently and embedded for research till posterity on the spate of mismanagement in appointment and tenure of infamous Atul Rai, former MD & CEO of IFCI Ltd, as a permanent tombstone of his sinister shenanigans which came to end yesterday 30th May 2013 afternoon. Rule of Law has been upheld by ouster of Atul Rai, by Ministry of Finance, Govt of India, by intervening firmly in the matter.
Transcript of CPIL releases complete set of briefs and counter lodged in writ filed at Hon'ble Supreme Court of...
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14.Annexure-P/1 0Copy of Gazette Notification dated 23.11.2006 asnotified also vide OM dated 05.10.2006 by Ministry 0':
13.An nexure-P/9Copy of the letter dated 18.11.2005 of the FinanceMinister
12.Annexure-P/8Copy of letter-dated 20.03.2006 of the Ministry ofFinance
11.Annexure-P/7Copy of letter-dated 06.09.2005 of the Ministry ofFinance
10.Annexure-PIGCopy of Page No. 10 of Annual Report for 2005-06 ofIFCI dated "illegible" evidencing appointment of ShriAtul Kumar Rai as Government Nominee on theBoard of IFCI in place of Shri Vinod Rai
9. Annexure-PISCopy of letter-dated 05.01.2005 of the Ministry ofFinance
8. Annexure-P/4Copy of the letter dated 29.01.2004 of Mr. Rai to ShriV.P. Singh, CMD, IFCI
7. Annexure-P/3Copy of the letter dated 23.09.2003 to the Pay &Accounts Officer about the sanction of payment ofgrant of Rs. 1573 crores to IFCI
Copy of the letter dated 22.07.2003 of Shri Rai to Mr.Malia
6. Annexure-P/2
(ii) Copy of Industrial Finance Corporation (Transferof Undertaking & Repeal) Act, 1993
(i) Copy of Industrial Finance CorporationAct,1948
Copies of the Acts
5. Annexure-P/1 (colly)
4. Writ Petition with affidavit
3. Synopsis and List of Dates
2. Check-List
1. Listing Proforma
SI. No. Particulars of Documents
r r··f'1-11+ <g26.Annexure-P/22
Copy of the information given regarding loans/grantsto IFC vide letter dated 2/4.03.2009
14- (:,25.Annexure-P/21
Copy of the letter dated 12th December, 2007regarding investment of Rs. 523 crores in OptionallyConvertible Debentures
24.Annexure-P/20A copy of the Memorandum No. 443/2002-2003 dated'nil' regarding terms of appointment of Shri V.P. Singh,ex-CMD ".of IFCI which also indicated constitution ofNomination committee for selection of CMD
140--14-3
23.Annexure-P/19A copy of Page NO.3of Annual Report for 2006-07 o~lFCI evidencing appointment of Shri Atul Kumar Raias Whole Time Director of IFCI w.e.f. 1st June, 2007and re-designating him as CEO & MD from t t" July2007
22.Annexure-P118A copy of DFS Letter No.A-190111229/2002-Estt.dated 1-6-2007 regarding Govt. approval for taking upappointment in IFCI
13<621.Annexure-P/17
A copy of declaration dated 31.05.2007 submitted byShri Atul Kumar Rai
20.Annexure-P/16Copy of Departmental Noting recorded in Departmentof Financial Services in the matter (obtained underRTI Act) dated 04.05.2007
19.Annexure-P/15A copy of Note dated 30-4-2007 submitted by ShriAtul Kumar Rai seeking Government approval forjoining IFCI as its Whole Time Director
t'1.1-/2b
18.Annexure-P/14A copy of the Department File notings of various datesdealing with the request of Shri Atul Kumar Rai ~orseeking voluntary retirement from Govt. of India andtaking up commercial appointment in IFCI
17.Annexure~P/13Copy of the letter dated 14.03.2007 of Ministry ofFinance to the Pay and Account Officer
\\1-
16.Annexure-P/12Copy of letter-dated 05.02.2007 of Sh'ri Atul KumarRai giving notice for voluntary retirement from serviceto attend certain personal and family matters
\t4- ...1rb15.Annexure-P/11
A copy of blank Form No. 25 dated 'nil'
\D~-119
Personnel, Public Grievances & Pension prescribingprocedure for seeking permission by the Govt. office-sfor taking up commercial employment after retirement
19 D
184-
• 36.Annexure-P/32A copy of letter dated 22.12.2009 of Prime Minister tothe Rajya Sabha M.P., Shri Narayan Singh Keshri
37.Annexure-P/33(collv)Copies of letters of Lok Sabha M.P., Shri VirenderKashyap
(i) Copy of letter dated 24.12.2009
(iii) Copy of letter dated 26.12.2009
35.Annexure-P/31 (colly)Copies of letters dated 18.12.2009 of Lok Sabha M.P.,Shri Ashok Argal(i) Copy of letter regarding appointment of
Respondent No.4(ii) Copy of letter regarding financial irregularities
34.Annexure-P/30(colly)Copies of letters of Rajya Sabha M.P., Shri NarainSingh Kesari(i) Copy of letter dated 17.12.2009 regarding
appointment of Respondent No.4(ii) Copy of letter dated 18.12.2009 regarding
financial irregularities
33.Annexure-P/29Copy of letter dated 07.12.2009 of Lok Sabha M.P.,Shri Ashok Kumar (Rawat),
32.Annexure-P/28Copy of letter dated 07.12.2009 of Rajya Sabha M.P.,Shri Brajesh Pathak addressed to the FinanceMinister of India•
31.Annexure-P/27Copy of joint letter dated 07.12.2009 of Lok SabhaM.P.s, addressed to the Finance Minister".
30.Annexure-P/26Copy of the letter dated 12.10.2009 by AIIFCEA to theFinance Minister
29.Annexure-P/25A copy of DFS Letter F.No.2/10/2009-Estt dated03.09.2009 regarding Salary drawn by Shri AtulKumar Rai for the month of May, 2007
J28.Annexure-P/24
Copy of the letter dated 06.08.2009 of AIIFCEA
27.Annexure-P/23Copy of letter dated 22.04.2009 from the Office of theRegistrar of Companies, NCT of Delhi & Haryanaregarding affairs of IFCI received by IFCI on23.04.2009
50.Annex ure-P/46 (colly)-A copy of Questionnaire alongwith Answer dated19.11.2010 in Parliament
(ii) Copy of letter dated 28.09.2010 of the Ministry ofFinance
49.Annexure-P/45(colly)Copies of letters under RTI(i) A copy of letter dated 23.08.2010 seeking for RTI
information
Annexure-P/44A copy of the judgment in WP (C) 4596/2007Of the Delhi High Court
48.
47.Annexure-P/43A copy of detail of financial assistance given to theIFCI as answered by the Minister of State in theMinistry of Finance to a question in Lok Sabha on06.08.2010
46.Annexure-P/42Copy of the judgment dated 09.07.2010 in WP (C) No.7097
45.Annexure-P/41A copy of letter dated 19th May, 2010 of Shri NamoNarain Meena
44.Annexure-P/40Copy of the story of TOI dated 06.04.2010
43.Annexure-P/39Copy of the story of magazine "Money life" dated11.03.2010
42.Annexure-P/38A copy of letter dated 20.01.2010 of Finance Ministerto the Lok Sabha M.P., Shri Ashok Kumar (Rawat)
41. Annexure-P/37A copy of DFS Letter F.No.20/24/2009-IF-1 dated13.01.2010 confirming that no advertisement wasissued by IFCI for the post to which Shri Atul KumarRai was appointed
40.Annexure-P/36A copy of letter dated 01.01.2010 of Prime Minister tothe Lok Sabha.M.P., Shri Ashok Argal
39.Annexure-P/35A copy of letter dated 01.01.2010 of Prime Minister tothe Lok Sabha M.P., Shri Virender Kashyap
38.An nexure-P/34A copy of letter dated 30.12.2009 of Prime Minister tothe Lok Sabha M.P., Shri Ashok Arga!
Applicationfor interimdirection56.
55.Annexure-P/51A copy of report dated 28.03.2011 published by"Bu'reaucracyToday"
54.Annexure-P/50Copy of letter dated 22.02.2011of RajyaSabha M.P.,Shri N.K. Singh alongwith the representation dated21.02.2011
53.Annexure-P/49Copy of letter dated 16.02.2011 of Rajya Sabha M.P.,Shri Mahmood A. Ma:lani .
52.Annexure-P/48A copy of DFS Letter F.No.20/24/2009-IF-1 dated02.02.2011 along with the series of ear1iercorrespondences
(ii) Copy of letter dated 04.05.2010 received from AllIndia Industrial Finance Corporation Employees'Association regarding the state of affairs in IFCI
.51.Annexure-P/47(colly)Copies of letters(i) Copy of DFS Letter F.No.20/2012010-IF-1 dated
07.01.2011
:N.A.
:N.A.
: 08 (0812)
: OTHER PIL MATTER
:N.A.
(please fill up the No. & Relevant Sub. Category)
No. of subject Category full name
13. title of the Act involved
14. Sub-classification
(Indicate section/article of the statute
15. Point or Points of law raised in the
Case
10. In case it is a tax matter
a) Tax amount involved in the matter : N.A.
b) Whether a statement of the case was call
For or rejected : N.!"'.
d) Exemption Notification/Circular No. : N.A.
11. Valuation of the matter : N.A.
12. Classification of the matter
:N.A.
:N.A.
: N.A.
: FOR INTERIM DIRECTIONS
Or in question
BG. In Labour Industrial Disputes Matters
1.0. Reference/Award No. if applicable
9. Nature of Urgency
:N.~.
: N'.A."Catchword" of other similar matters
BE. In case of Motor Vehicle Accident Matters
Vehicle No.
BF. In Service Matters
(i) Relevant service rule if any : N.A.
(ii) G.O.lCircular/Notification, if applicable
: N.A.
: N.A.
i) Suit No. name of Lower Court
Date of judgment
BD. In Writ Petitions:-
:N.A.
ii) Exact purpose of acquisition &
Village involved
8C. in Civil Matters:-
:N.A.Dated, issued by Centre/State
: PRASHANT BHUSHAN
: N.A.
: N.A.
: PIL
8. Date of Impugned Order : N.A.
8A. Name of Hon'ble Judges : N.A.
8B. in LandAcquisition Matters
i) Notification/Govt. Order No. (u/s 4,6)
: CIVIL
: CENTRE FOR PIL
: prashantbhush@ gmail.com
: UNION OF INDIA & ORS.
: NOT AVAILABLE: W.P. (CIVIL) NO. OF 2011
1. Nature of the matter
2. (a) Name of the Petitioner
(b) E-mail id
3. (a) Name of the Respondents
(b) E-mail id
4. Number of the Case
5. (a) Advocate for the Petitioners
(b) E-mail id
6. (a) Advocate for the Respondents
(b) E-mail id
7. Section dealing with the Matter
tllIN THE SUPREME COURT OF INDIALISTING PROFORMA
~~~(PRASHANT BHUSHAN)Advocate for the Petitioner
:N.A.
: N.A.
:N.A.
:N.A.
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: N.A.
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-----~,.-.---~-.~-..~-..
Date: ~\~ l'lo\,Place: ~~WbELHI
Case no. in 1st Appellate court & Date of
Judgment.
(II) Name & place of trial court
Case no. in trial Court & date of judgment
(iii) Name & Place of 1sl Appellate Court
21 Whether a data has already been fixed
Either by Court, or on being mentioned
For the hearing of the matter? If so
Please indicate the data fixed/note
22 Is there caveator, if so, whether a
Notice has been issued to him?
23 Whether data entered in the computer?
24. if it is a Criminal Matter, please state:
a) whether accused has surrendered
b) Nature of offence, i.e.convicted under
Section with Act.
c) Sentenced awarded
d) Sentence already undergone by the accuse
24.e (i) FIR/RC/etc
Date of Registration of FIR etc
Name of Place of the Police Station
What was the direction of the Courtc)
17.A. was S.L.P.lAppeal filed against same impugned
Judgment Order earlier? If yes, particulars
18. whether the petition against interlocutory final
Order/Decree in the case
19 it is a fresh matter, fresh matter,
Please state the name of High Court and
The Coram in the impugned judgment
20 the matter was already listed in the Court?
a) When was it listed?
b) ,What was the Coram?
16. Whether matter is not be listed before
Any Hon'ble Judge, mention the name
Of the Hon'ble Judge
17. Particulars of identical/similar case or
Cases ifany
a) Pending case
b) Decided cases with citation
•
1. (I) Whether SLP (Civil) has been filed tn Forrn no. 28 with \ Yes/No/Nt...certificate as per Notification dated 17.06,1 997
(ii) Whether the prescribed Court Fee has been filed Yes/No,__...2. (i) Whether proper and required Number of paper bOOKS(1+3) Yes/No
have been filed, ~
(ii) Whether brief list of dates/events has been filed? Yes/No~
(iii) Whether paragraphas and pages of paper books have been :e~/Nonumbered consecutively and correctly noted in index I~ l
3, Whether the contents of the petition/appeal, applications and Yes/Noaccompanying documents are clear, legible and typed in double ~space on one side of the paper,
4, Whether the petition and the application bear the Signature of \ Yes/No -,the counsel/in-person "-'
5, Whether an affidavit of the petitioner In support of the Yes/Nopetition/appeal/application has been filed, properly attested and
~identified,
6, If there are any vemacular aocuments/portionsnines and I Yes/No -Itranslation of such documents are not filed, whether application ~for exemption from filing Official Translation with affidavit andCourt fee, has been filed, '
7, If a party in the Court below has died, whether appticatio., for' Yes/Nobringing LR's on record indicatin*he date of death, \...-.relationship, age and addresses along· h affidavit and Court Ifee has been filed, .,
8, (I) Whether the Vakalatnama has b-een properly executed by the I Yes/Nopetitioners/appellants and accepted and identified by the \.....- IAdvocate and memo of appearance filed, I I
(ii) If a petitionens represented through pO,werof attorney, whether Yes/No Ithe original power of attorne~ in, EnghshlTranslated copy has ! '--been filed and whether application for permission to appearl Ibefore the Court has been filed,
Iii) (a) Whether the petition is 1iTed by a body regiStered, I Yes/No Iunder any Act or Rules? '--(b) If yes, IS copy of the Registration filed?
I~NO(iv) (a) Whether the person filing petition for such I Iincorporated body has authority to file the petition? ~No
(b) If yes, is proof of such authority filed I '{;iNO I9, Whether the petition/appeal contains a statement in terms of I Yes/No
order XVIIXXI of Supreme court rules as to whether petitionerl--has filed any petition against the lmpugned order/judgment
earlier, and if so the result thereof stated in the petition
10, Whether certified copy of the impugned judgment has been filed: Yes/Noand if certified copy is not available, whether an application for \...-. Iexemption for filing certified copy has been filed,
J.11, Whether -the particulars of the judgme nt passed by the Cou rt (s) Yes-No
below are uniformly written in all the documents, (...,_ I
MODIFIED CHECK LIST
?~~~(PRASHANT BHUSHAN)
COUNSEL FOR THE PETITIONER'Date. 9{l61'~l \
Yes/No
"If any identical matter is pending /disposed of by SupremeCourt. whether complete particulars of such matters has beengiven? _ I
(ii)
Whether the complete listing Perforrna has been filed \n signed Yes/Noand included in the paper books? '--
21. (i)
20. In case anticipatory bail whether a copy of FIR or translated YeslNocopy has been filed. "'-"-
IIn case of quashing of FIR whether a copy of the petition filed Yes/Nobefore the High Court under section 482 of Cr. P.C. has been ~filed.
19.
Yes/No/NA
\._.....
.-.-Whether the in case where proof of surrender/separatecertificate from the Jail authority has not been filed, anapplication for exemption from filing separate proof ofsurre4nder has been filed.
18. In matters involving conviction whether separate proof of YesiNo/NAsurrending has been filed (please see judgment dated \....-16.06.2006 in Crl Appeal No. 685/2006 entitled MayuramSubramanian Srinivasan Versus C.B.I.) (Copy of surrenderproof to be include in the paper books.)
If required copy of the judgment/order/notification award etc. is res/Nonot filed. whether letter for undertaking has been filed in civilmatters.
(ii)
,
YesiNoIn SLP/Appeal against the order passed in Second Appealwhether copies of the orders passed by the Trail Court and theFirst Appellate Court have been filed
17. (i)
Whether the petition/appeal is confined only to the pleadings in Yes/Nothe Court !Tribunal below and '--
If not whether application for taking additional grounds/ Yes/Nodocuments with affidavit and Court Fee has been filed. '--
16.
Whether the annexure referred to in the petition are true copies I Yes/Noof the documents before Court below and are filed in I '--'chronological order as per list of dated. I
If the petition/appeal is time barred, whether a pplication for Yes/Nocondonation of delay mentioning the no. of days of delay, with '---affidavit and Court Fee has been filed
14,
Whether in case of appeal by certificate the appeal is Yes/Noaccompanied by judgment and decree appeared from and order I \.-granting certificate
13.
Whether the cause title of the petition/appeal correspondents to Yes/Nothat of the impugned judgment and names of parties therein? \....-
Oi)
Whether the addresses of the parties and their representatiOnS! Yes/Noare complete and set out properly and whether detailed cause ~title has been mentioned in t he impugned, judgment a nd if not,whether the memo of parties has been filed, if required?
12.(i)
Optionally Convertible Debentures (though a period of more than eight years has
the GOI) and RsAOO crores as loan to IFCI and invested Rs. 523 crores in
grant-in-aid (out of the total bail-out package of Rs.5220 crores announced by
The Government of India in last eight years released Rs. 2409 crores as
director on the board of IFCI too.
same time, by virtue of this posting, he was working as Government nominee
after works relating to sanction of grants and loans/other facilities to IFC!. At the
restructuring of IFCI, in the Department of Financ 31 Services. He was looking
Shri Atul Kumar Rai, was in charge of th9 section looking after the
under Companies Act.
Repeal) Act, 1993 was passed vide which IFCI wa.~;converted into Company
financial intuitions, Industrial Finance Corporation (Transfer of Undertaking &
competitive terms and to create a more leveled plc.ying field across similar
order to increase IFCI's accessibility to the market to raise resources on
cater to medium & long-term finance needs of the industria! sector. However. in
The IFCI was created under Industrial Finance Corporation Act, 1948 to
serious financial burden on the institution etc.
decisions to reward himself by way of introduction of hefty incentives causing
serious corrupt practices involving various financial irregularities in IFCI,
CEO & MD of IFCI flouting all the prevalent Rules and thereafter, indulges in
Companies Act in 1993, then abandons his Government job and becomes the
rupees in favour of IFCI which was already converted into a company under
Ltd. (hereinafter referred to as IFCI), ensures release of thousands of crores
simultaneously as Nominee Director in the Industrial Finance Corporation of IndiaI
Department of Financial Services (DFS), Ministry of Finance as Director (IF) and
wherein Shri Atul Kumar Rai, a 1985 IES officer, who was working in the
bringing to the notice of this Hon'ble Court a glaring example of corrupt practice.
32 of the Constitution of India. The Petitioner by way of the present writ petition is
That the present writ petition is being filed in public interest under Article
8SYNOPSIS AND LIST OF DATES
As per Rule 10 of the CCS (Pension) Rules, Shri Rai was required to seek
Government approval in the prescribed Form No. 25 for taking up post retirement
commercial employment and was further required to declare if he had any
dealings with IFCI in the last three years of his official career and make a
mandatory declaration in the form of an affidavit that he has not been privy to
sensitive or strategic information in the last three years of service.
As per the Noting of the Finance Ministry, Shri Atul Kumar Rai never
submitted Form 25. On 015t June 2007, the competent authority of Government
of India conveyed approval for taking up appointment in IFel subject to the
aforementioned mandatory declaration by Shri Atul Kumar Rai in Form No, 25,
Instead Shri Atul Kumar Rai submitted the Mandatory Declaration dated 31-5-
Director. Thus, Shri Rai for 54 days (7.3.2007 to 29.4.2007) did not disclose the
fact that his appointment has already been approved by the Board of IFel far
back on 7-3-2007.
2007 itself, Mr. Rai submitted a Note seeking permission for taking up the
appointment as a Whole Time Director in IFel. In his above-referred Note dated
30-4-2007, Mr. Rai stated that the Board of Directors of IFCI, at its meeting held
on the yth March, 2007, has resolved to offer him the post of Whole Time
On so" April 2007, the decision was taken in the Ministry of Finance to
relieve Mr. Rai with effect from 31.05.2007. On the same day i.e on 30:h April.
in IFCI.
/
Clapsed since the above disbursement, but the government has not yet taken a
decision on the conversion of the said Debentures into equity), in addition to
guarantee given by Government for raising domestic & foreign currency loans.
As Mr. Rai found that as a consequence of this large-scale induction of
Govt. funds lfCl had started generating profits, he immediately, after the Ministry
took a decision to send Shri R.M. Malia, the then incumbent in IFCI, to SIDBI,
applied for voluntary retirement vide his application lett.er dated 05.02.2007. At
the same time, by using his influence in Govt. of India and on the board of IFel,
he ensured that no advertisement was issued for the post of Whole Time Director
been put up on the willful defaulters list by the Reserve Bank of India;
(iii) Sanction of Rs. 225 crores to Blue Coast Hotels Ltd., whose name has
he had confessed to irregularities in the Satyam;
10 lakh shares of the Satyarn and the MAYTAS barely 72 hours before
Ramalinga Raju had borrowed a loan of Rs. 85 crores after pledging
Satyam in MAYTAS Infrastructure. It has come to light that Shri
questionable acquisition of 17.4 % shareholding of Rajus of the
on various irregularities/allegations, appalling corruption including the
Delhi and Haryana to the IFCI, calling for an explanation from the IFCI
(ii) Notice dated 22.04.2009 issued by the Registrar of Companies, NCT
per share, thereby inflicting a loss of Rs. 168 crores on the IFCl;
the Bank of India acquired the shares of the same company at Rs. 10
higher price of Rs. 35 per share whereas the Union Bank of India and
(i) Purchase of 5% stake in the MCX-SX by lfCl management on a much
financial have come into light, some of them are as follows:
After the induction of Mr. Rai in IFCI, several irregularities including
got himself re-designated as the CEO & MD w.e.f. 11th July, 2007.
retirement from Government Service. Immediately thereafter Shri Atul Kumar Rai
Time Director in IFCI from the very next date of his release on voluntary
policy matters and was, therefore, not eligible for taking up the post of Whole
Director on the Board of IFel and thus was privy to all sensitive, strategic and
Finance dealing with policy matters related to IFCI and a Government Nominee
before joining IFCI was holding dual position of Director (IF) in the Ministry of
The fact of the matter was that, as mentioned above, Shri Atul Kumar Rai
propose to practice or consult."
work of the organisation that I propose to join or to the areas in which /
three years of service, which is directly related to the areas of interest or
"(b) I have not been privy to sensitive or strategic information in the last
declaration as under:-
2007 on a blank paper not on Form 25 wherein, inter-alia, he made a totally false
However, the most disturbing aspect is that although IFCI is getting huge
fund as grantlloan or bailout package from the Government, but still it is holding
itself out as an independent company over which government has no control and
has declared itself out of the purview of the RTI Act also. At the same time, the
Government is also taking stand at various forums that the Government cannot
interfere in the functioning of the institution as it is no longer a statutory body and
has converted into company under Companies Act. It would be pertinent hereto
mention that in the aforesaid Repeal Act there is surviving provision in Section 11
which ensures that Sections 33, 34, 34A, 35 and 43 of 1948 Act will continue to
be applicable which in turn ensures that the IFCI will continue to submit its assets
and liabilities together with its profit and loss account and a report of the working
(iv) Repeated service extensions given to a tainted officer by name Shri
S.K. Mandai, who was supposed to be superannuated in October,
2008 besides elevating him on the IFCI Board as Whole time Director
despite the fact that Shri Mandai was indicted in two different cases.
Besides committing various financial irregularities in IFCI, Shri Atul Kumar
Rai burdend IFCI with his personal Salary of around Rs. 7 Lakhs per month
during the year 2009-10. It is learnt that the emoluments of Shri Rai are
estimated at around Rs.1.5 crore during the year 2010-11.
Further, while releasing grants to IFCI (2003-2006), Ministry of Finance
always stipulated a condition that IFCI would "not introduce performance linked
scheme/ESOP". However, while releasing grant of Rs. 220.31 cores in March,
2007 this condition was strangely omitted from the letter F No.6(8)/2004-IF-1
dated 14thMarch, 2007. This letter is interestingly dated after ih March, 2007 on
which date the Board of IFCI offered the post of Whole Time Director to Shri Atul
Kumar Rai. Shri Rai, immediately after assuming the charge of CEO & MD,
introduced a Scheme of Performance Linked Incentive for the officers of IFCI in
August, 2007 and in this way rewarded himself,' along with his associates with
hefty amounts of incentives even though IFCI was carrying huge Non Performing
Assets and Accumulated Losses at the time of introduction of the said Scheme.
the Govt. has decided to take over the liabilities of IFCI in respect of
22.07.2003 Mr. Rai as Director (EA & IF) wrote to Mr. R. M. Malia, ED IFCI that
New Delhi.
the Department of Financial Services (DFS), Ministry of Finance,
Nov, 2002 Shri Atul Kumar Rai (IES 1985) was appointed as Director (IF), in
the original Act were saved and retained in the Repeal Act.
Act, 1993; IFCI was converted into Company. Certain provisions of
Industrial Finance Corporation (Traisfer of Undertaking & Repeal)
1993 On the repeal of the Industrial Finance Corporation Act, 1948, by
Industrial Finance Corporation Act, 1948.
1948 IFCI was originally established as a statutory Corporation under
prevalent rules and regulations.
CEO & MD of IFCI as his induction as Whole Time Member is in total breach of
seeking a writ of quo-warranto for removal of Mr. f.tul Kumar Rai from the post of
financial irregularities which have come into light in recent past in IFCI and alsoI
Further, the Petitioner is seeking an independent investigation into various
Optionally Convertible Debentures by converting the debentures into equity.
and also it must take steps to enforce its investment of Rs. 523 crores in
released such a huge amount in its favour without holding any major stake in it
over the IFCI by virtue of the surviving provisions particularly when it has
Therefore, it is high time that the Government must exercise its control
Financial Institution under the Companies Act.
Hon'ble Division Bench in WP (C) 7097/2010 has held that the IFCI is a Public
4596/2007 has held that the IFCI is a public authority under the RTI Act and the
Moreover, the Hon'ble Single Judge of the Delhi High Court in WP (C) No.
laid before the Parliament.
audit report is to be forwarded to the Central Government and the same is to be
of the corporation during the year to the Central Government and further, everyF
infused huge fund in IFCI but it has no control over it as it's a
company under Companies Act and the GOI has no
shareholding in it.
The Finance Minister in a letter has admitted that GOI has1S.11.200q
Linked Scheme/ESOP.
The Ministry of Finance once again while releasing grants to
IFCI mentioned that IFel would not introduce Performance
06.09.2005
IFCI Ltd.
Shri Atul Kumar Rai succeeded Shri Vinod Rai, the present
CAG, as the Government Nominee Director on the Board of
21.0S.2005
Linked Scheme/ESOP.
The Ministry of Finance once again while releasing grants to
IFCI mentioned that IFCI would not introduce Performance
05.01.2005
with Punjab National Bank may be contemplated by the
Board of IFel n
and financial synergy. In this context, the option of merger
29.01.2004 Shri Atul Kumar Rai as Director (EA & IFI), wrote to Shri V.P.
Singh, the then CMD of IFCI, vide his DO letter No. 2/16/2002-IFI
Part dated zs" January, 2004:
"... It appears that IFel does not appear to have long term
sustainability on a stand alone basis. It appears that the only
viable course of action is to merge IFel with a large Public
Sector Delhi based Bank with which the IFel has operational
23.09.2003 The Ministry of Finance wrote to the Pay & Accounts Officer about
the sanction of payment of grant of Rs. 1573 crores to IFCI wherein
it was clearly stipulated as one of the conditions that IFCI would not
introduce Performance Linked Scheme/ESOP.
below Rs. 1 lakh.
the govt. guaranteed SLR bonds and retail borrowings of investors
this fact for 54 days (7.3.2007 to 29.4.2007).
Board of IFel far back on 7-3-2007, Shri Rai did not disclose
Director. Thus, though his appointment was approved by the
March, 2007, had resolved to offer him the post of Whole Time
the Board of Directors of IFCI at its meeting held on the th
referred Note dated 30-4-2007, Shri Atul Kumar Rai stated that
appointment as a Whole Time Director in IFC!. In his above-
Rai submitted a Note seeking permission for taking up the
with effect from 31.05.07. Shri Rai has agreed to this."
On the same day i.e on so" April, 2007 itself, Shri Atul Kumar
April, 2007, in his noting that "it has been decided to relieve him
Secretary (Admn.) in the Ministry of Finance recorded on 30th
30-04-2007 at various levels. Shri Amitabh Verma, Joint
Departmental Notings (pages 33-37) between 06-02-2007 and
The application of Shri Atul Kumar Rai was examined in the
Scheme/ESOP.
removed the condition of not introducing Performance Linked
Rs. Two Hundred Twenty Crore and Thirty One Lakh to IFCI
The Ministry of Finance for the first time while releasing grant of
30.04.2007 when Mr. Rai's application was accepted.
Director, although this fact was disclosed much later on
March, 2007, resolved to offer Mr. Rai the post of Whole Time
family matter.
The Board of Directors of IFel at its meeting held on the 7th
the earliest, on the reasons of attending certain personal and
sought for voluntary retirement from the Government service at
Shri Atul Kumar Rai, vide his application dated 05.02.2007,
Scheme/ESOP.
mentioned that IFel would not introduce Performance Linked
The Ministry of Finance again while releasing grants to IFel
30.04.2007
14.03.2007
07.03.2007
05.02.2007
20.03.2006
given to IFCI from 2001-02 to 2008-09.
The Ministry of Finance in RTI gave details of grant and loan
Debentures.
India had invested Rs. 523 crores in Optionally Convertible
The Ministry of Finance vide its letter F. No.6/8/2004-IF-1 dated
12thDecember, 2007 confirmed the fact that the Government of
That Shri Atul Kumar Rai got himself re-designated as the CEO
& MD w.e.f, 11thJuly, 2007.
consult. "
to join or to the areas in which 1 propose to practice or
the areas of interest or work of the organisation that I propose
in the last three years of service, which is directly related to
"(b) I have not been privy to sensitive or strategic information
under:-
Declaration dated 31-5-2007 wherein, inter-alia, he declared as
31/5/2007). Shri Atul Kumar Rai submitted false Mandatory
enclosed therewith (which he signed back - dated on
mandatory declaration by Shri Atul Kumar Rai in the Annexure
approval for taking up 'appointment in IFCI subject to the
The competent authority of Government of India conveyed
information given under the RTI Act.
advertisement which is not correct as it came out under the
DFS that he had applied for appointment in IFCI against an
Shri Atul Kumar Rai, it was stated on page 43 of the Noting of
to 01.06.2007 at various levels. While examining the request of
the Departmental Noting on pages 38 to 47 between 04.05.2007
appointment as a whole time Director in IFCI, was examined in
The aforesaid request of Shri Atul Kumar Rai for taking up the
2/4.03.09
12.12.2007
11.07.2007
04.05.2007
to
01.06.2007
The Office of the Registrar of Companies, NCT of Delhi &
Haryana, in reference to copy of OM received from Lok Sabha
Secretariat along with Complaint regarding affairs of IFCI, vide
letter dated 22.04.2009 called upon the IFCI Ltd. to furnish
information/explanation on categorical points/allegations/issues
interalia as under:
(i) Granting of Loans against shares pledged by promoters
and acquisitions of such shares by IFCI. It was alleged that
shareholding of Rajus in Maytas Infrastructure Ltd. got
reduced following acquisition of its 17.4% shares by IFCI
which were pledged to it by the promoter family. Further it
was asked regarding loans granted to Unitech Limited,
United Spirits Ltd., Core Projects Ltd. and Lupin against
pledge of shares by the promoters of these companies.
(ii) Crores of Rupees belonging to public have been freezed
by Shri Atul Kumar Rai, CEO and MD of the company and
wholetime Director Shri S.K. Mandai in the matter of
underwriting shares of Tata Motors Limited to the extent of
Rs. 250 Crore by IFCI which devolved on it and in addition
to this, IFCI has subscribed and disbursed a sum of Rs.
130 Crores to Hindalco Limited and a news item appeared
in Business Times on 31.10.2008 indicating a Loss of Rs.
120 Crores to IFCI.
(iii) Good number of NPA Loan assets have been sold and
transferred to a particular person (one Mr. Khandelwal)
only against the deposit of earnest money.
(iv) Shri Atul Kumar Rai sanctioned a loan of Rs. 350 crores to
a Company namely DSP Merill Lynch, which is not an
industrial concern but an investment and security dealing
company. This was done in contravention of RBI guidelines
for PFls.
22.04.2009
Rs. 150 crores of public money.
It was apprised that the said transaction amount to a fraud of
price @ 35 per share from Financial Technologies in July, 2009.
5% stake in MCX by the Management of IFel on much higher
the representation pointing out fraud/corruption in purchase of
Ashok Kumar (Rawat) vide letter dated 07.12.2009, forwarded
Whole time Director/CEO in IFC!. One Lok Sabha M.P., Shri
fraudulent appointment obtained by Shri Atul Kumar Rai as
addressed the Finance Minister of India on the issue of
M.P., Shri Brajesh Pathak vide letter dated 07.12.2009 also
Whole time Director/CEO in IFC!. Similarly, one Rajya Sabha
fraudulent appointment obtained by Shri Atul Kumar Rai as
addressed the Finance Minister of India on the issue of
Some Lok Sabha M.Ps. vide joint letter dated 07.12.2009
false declaration was sent by AIIFCEA to the Finance Minster.
Another letter regarding perjury committed by Mr. Rai by making
2/10/2009-Estt dated 3-9-2009).
41.064/- (appx), as per reply to an RTI query (DFS letter
whereas his monthly gross salary in Government was Rs.
Rs. 86 lakhs, as per Annual Report of IFCI for 2009-10.
The remuneration drawn by Shri Atul Kumar Rai amounted to
appointed on the basis of his false declaration.
Economic Affairs seeking Mr. Rai's removal as he was
Employees Association (AIIFCEA) to the Secretary, Department
A letter was written by All India Industrial Finance Corporation
accounts etc. without due diligence and proper appraisal.
sanctioning Loans, setting one time settlement of loans
(vi) Ruthlessly indulging in extravagant expenditure,
Shri S.K. MandaI.
role and activities of Shri Atul Kumar Rai accompanied by
(v) Serious allegations of mis-deeds and irregularities on the
._
07.12.2009
12.10.2009
03.09.2009
06.08.2009
The Hon'ble Prime Minister vide letter dated 30.12.2009
acknowledged the letter dated 18.12.2009 of Lok Sabha M.P..
Minister of India raised the same issues.
Another Lok Sabha M.P., Shri Virender Kashyap vide letter
dated 24.12.2009 and 26.12.2009 addressing to the Prime
One Rajya Sabha M.P., Shri Narain Singh Kesari vide letter
dated 07.12.2009 wrote to the Prime Minister of India, pointing
out perjury committed by Shri Atul Kumar Rai, CEO & MD, IFCI
Ltd. and thereby requested for proper investigation and action.
On the very same date, Shri Narain Singh Kesari forwarded the
representation pertaining to the aforesaid irregularities in the
purchase of shares in MCX.
One Lok Sabha M.P., Shri Ashok Argal vide letter dated
18.12.2009 addressing to the Prime Minister of India, forwarded
the representation pointing out perjury committed by Shri Atul
Kumar Rai, CEO & MD, IFCI Ltd. and thereby requested for
issuance of suitable directions to the concerned Ministry/CBI for
proper investigation and action. A copy of the said letter of the
even date was even addressed to the Finance Minister of India.
On the very same date, Shri Ashok Argal vide letter of the even
dated addressing to the Prime Minister of India, forwarded the
representation pertaining to the aforesaid irregularities in the
purchase of shares in MCX.
The Hon'ble Prime Minister himself under his signature vide
letter dated 22.12.2009 acknowledged two letters dated
17.12.2009 of Rajya Sabha M.P., Shri Narayan Singh Keshri:
pertaining to the financial irregularities/frauds and perjury
committed by Shri Atul Kumar Rai, CEO & MD IFCI and PMO
on 04.01.2010 forwarded the same to the Finance Secretary for
appropriate action.
L
-_.,-- ------'''. --" ....
30.12.2009
24.12.2009/
26.12.2009
22.12.2009
18.12.2009
17.12.2009
;'"
Directors of IFCI, by virtue of which he had been privy to all
Director (IF) and a Government Nominee on the Board of
The fact that Shri Atul Kumar Rai held strategic dual position of
before confessing his crime.
loan of Rs. 85 crores by pledging its shares just three days
The Times of India carried a story that Raju of Stayam got the
defaulter company.
reported that IFel sanctioned a loan of Rs. 225 crore to a
A magazine namely Money life came out with a story in which
into.
20.01.2010 informed him that he was having the matter looked
Ashok Kumar (Rawat), the Finance Minister vide his letter dated
In response to letter dated 07.12.2009 of Lok Sabha M.P.. Shri
IFCI).
post" (post on which Shri Atul Kumar Rai was appointed in
confirmed that "No Advertisement was issued by IFCI for the
DFS, vide its letter No. 20/24/2009-IF-1 dated 13.01.2010
In reply to an RTI query by one Smt. Savita Anand, New Delhi;
Services for action as appropriate.
dated 18.12.2009 to the Secretary, Department of Financial
the same. The PMO on 08.01.2010 forwarded the said letter
Kumar Rai, CEO & MD, IFCI in the purchase of shares in MCX:
relating to the aforesaid irregularities committed by Shri Atul
letter dated 18.12.2009 of Lok Sabha M.P., Shri Ashok Argal
Minister vide letter dated 01.01.2010 also acknowledged the
Lok Sabha M.P., Shri Virender Kashyap. The Hon'ble Prime
acknowledged two letters dated 24.12.2009 & 26.12.2009 of
The Hon'ble Prime Minister vide letter dated 01.01.2010
Financial Services for action as appropriate.
letter dated 18.12.2009 to the Secretary, Department of
\-jShri Ashok Argal. The PMO on 06.01.2010 forwarded the said
19.05.2010
06.04.2010
11.03.2010
20.01.2010
13.01.2010
01.01.2010
under examination.
into MCX Stock Exchange Limited has been received and is
has replied that the complaint in regard to the IFCI's investment
23.09.2010, the Ministry of Finance vide letter dated 28.09.2010
In response to RTI information sought vide letter dated
Bench.
is under challenge by way of Appeal before the Hon'ble Division
the requirements of Section 2(h)(d)(i) of RTI Act. The said order
Order dated 17.08.2010 was pleased to hold that IFCI satisfies
Judge of the Hon'ble High Court of Delhi at New Delhi vide
under the provisions of RTI Act. However the Hon'ble Single
Delhi by way of W.P. (C) No. 4596/2007 that IFel is not covered
Shri Atul Kumar Rai agitated before the Hon'ble High Court of
given to the IFC!.
an answer to a question gave the detail of financial assistance
The Minister of State in the Ministry of Finance in Lok Sabha in
virtue of its having created under a Central Act.
pleased to hold IFCI a Public Financial Institution, inter-alia by
of 2008 titled; Finite Infratech Ltd. Vs. IFCI Ltd & Ors was
vide judgment and Order dated 09.07.2010 in W.P.(C) No.7097.1
The Hon'ble Division Bench of the Hon'ble High Court of Delhi
IFCI is a company under Companies Act.
Minister further says that the govt. cannot do in this matter as
(Rawat), Member of Parliament but in the said letter the Hon'ble
Government of India in his D.O. letter No. 1/43/2009-stt(part file)
dated the 19th May, 2010 addressed to Shri Ashok Kumar
Namo Narain Meena, the Hon'ble Minister of State for Finance.
three years of his service, has also been confirmed by Shri
~sensitive and strategic information about IFCI for more than
23.08.2010&
28.09.2010
17.08.2010
06.08.2010
09.07.2010
22.02.2011 addressed to the Secretary, Financial Services
One Rajya Sabha M.P., Shri N.K. Singh, vide letter dated
points expeditiously and to take action as deemed fit.
submitted therein; and thereby requested to examine the said
declaration by Shri Atul Kumar Rai, amongst 15 points
superannuation and obtaining appointment in IFCI on false
including second extension to Shri S.K. Mandai after
Commissioner, pointed out financial irregularities/frauds
dated 16.02.2011 addressed to the Chief Vigilance
One Rajya Sabha M.P., Shri Mahmood A. Madani, vide letter
was likely to take some more time.
matter regarding irregularities in IFCI was under process, which
respect of the earlier letter dated 27.04.2010 of DFS that the
02.02.2011 in regard to the reminder letter dated 29.12.2010 in
Department of Financial Services (DFS), vide its letter dated
In reply to RTI query by Smt. Savita Anand, New Delhi;
still awaited.
Employees' Association, the comments were invited which was
received from All India Industrial Finance Corporation
07.01.2011 replied that in regard to letter dated 04.05.2010
Department of Financial Services (DFS) vide its letter dated
In reply to an RTI query by one Smt. Savita Anand, New Delhi;
send comments which was still awaited.
in IFCI, it was simply replied that IFCI has been requested to
Complaint dated 22.07.2010 regarding corruption/irregularities
IFCI and actions are taken wherever appropriate. In regard to a
that the Complaints are examined after taking comments from
officials, the Minister of State in the Ministry of Finance replied
regarding irregularities taking place in IFCI involving higher
In parliamentary Question placed by one M.P. in the Lok Sabha
21.02.2011/22.02.2011
16.02.2011
02.02.2011
07.01.2011
19.11.2010
Hence the present Writ Petition.
influence.
recommendations of the present CAG in exercise of his
Rai in IFCI flouting the Rules under active personal support and
report exposed the illegality in appointment of Shri Atul Kumar
That a reputed magazine "Bureaucracy Today" in an exclusive
examination/consideration on the issue.
Atul Kumar Rai, CEO & MD, IFCI Ltd. for appropriate
forwarded representation regarding perjury committed by Shri
. 07.2011
March 2011
1(e) Union of IndiaThrough its SecretaryMinistry of Personnel, PublicGrievanes & Pensions,Through its Secretary (Personnel),Department of Personnel &
1(d) Union of IndiaThrough its Secretary,Ministry of Corporate Affairs,Govt. of India,'A' Wing, Shastri Bhawan,Rajendra Prasad Road,New Delhi- 110 001.
1(c) Union of Indiathrough its Secretary,Financial ServicesMinistry of Finance,3rd Floor, Jeevan Deep BuildingSansad Marg,New Delhi-110 001.
1(b) Union of Indiathrough its SecretaryMinistry of FinanceDepartment of Economic AffairsIES Cadre Controlling AuthorityNorth Block,New Delhi-110 001.
1(a) Union of India,through the Secretary,Hon'ble Prime Minister of India,Prime Minister's Office (PMO),South Block, Raisina Hill,New Delhi-110 001.
Versus
... petitionerCentre for Public Interest LitigationThrough its General SecretaryChamber NO. 43,Lawyers Chamber,Supreme CourtNew Delhi
IN THE MATTER OF::
(Under Article 32 of the Constitution of India)
OF 2011WRIT PETITION (CIVIL) No.
(CIVIL WRIT JURISDICTION)
IN THE SUPREME COURT OF INDIA
o
Companies Act in 1992, then abandons his Government job and becomes
favour of IFel which was already converted into a company under
referred to as IFCI), ensures release of thousands of crores rupees in
Director in the Industrial Finance Corporation of India Ltd. (hereinafter
(DFS) Ministry of Finance and simultaneously functioning as Nominee
IES officer, who was working in the Department of Financial Services.
corrupt practice, wherein Shri Atul Kumar Rai (Respondent No.4), a 1985
petition is bringing to the notice of this Hon'ble Court a glaring example of
32 of the Constitution of India. The Petitioner by way of the present writ
1. That the present writ petition is being filed in public interest under Article
MOST RESPECTFULLY SHOWETH:
The Humble petition of the petitioner above-named
Hon'ble Supreme Court of India.
The Hon'ble the Chief Justice of India and His Companion Justices of the
To,
A WRIT PETITION UNDER ARTICLE 32 OF THE CONSTITUION OF INDIA
.'.. ,..Respondents
4. Shri Atul Kumar Rai,CEO and Managing Director,Industrial Financial Corporation ofIndia (IFCI) Ltd.,IFCI Tower, 61 Nehru Place,New Delhi-110 019.
3. Central Bureau of Investigation,through the Director,Block No.3, Ground Floor,C.G.O Complex, Lodhi Road,New Delhi - 110 003.
2. Industrial Financial Corporation ofIndia (IFCI) Ltd.,Through its ChairmanIFCI Tower, 61 Nehru Place,New Delhi-110 019.
Training,Govt. of India,Sardar Patel BhavanSansad MargNew Delhi- 110 001.
o
(7.3.2007 to 29.4.2007).
far back on 7-3-2007, Shri Rai did not disclose this fact for 54 days
Director. Thus, though his appointment was approved by the Board of IFel
Mr. Rai stated that the Board of Directors of IFCI, at its meeting held on
the th March, 2007, had resolved to offer him the post of VVholeTime
appointment as a Whole Time Director in IFCI. In his above-referred Note.
itself, Mr. Rai submitted a Note seeking permission for taking up the
Rai with effect from 31.05.2007. On the same day i.e on 30u",April. 2007
April 2007, the decision was taken in the Ministry of Finance to reFeve r",l!
voluntary retirement vide his application letter dated 05.02.2007. On 30t~
induction of Govt. funds IFCI had started generating profits, he applied for
years. As Mr. Rai found that as a consequence of this large-scale
converted into company, as aid/bailout package etc during last eight
2. The IFCI got huge funds by the Government of India. despite being
hence, Respondent No. 1 is a necessary party in the present writ petition
approaching this Hon'ble Court seeking directions mainly against the UOI.
govt. on the issues raised in the present writ petition. As the Petitioner is
and some of them are supplied by the MPs who have been writing to the
are obtained under the RTI Act, some of them are published news reports
It is submitted that most of the documents annexed along with the Petition
Constitution of India.
the govt. is clearly arbitrary and hence, in violation of Article 14 of the
of MPs are annexed along with the present writ petition. The inaction of
govt. except for acknowledging the complaints. The letters/representations
issues for last three years but no action whatsoever has been taken by the
the Prime Minister and the Finance Minister) raising the aforementioned
several Member of Parliaments have been writing to the govt. (including
irregularities in IFC!.
Although the Petitioner has not approached any authority directly but
indulges in serious corrupt practices involving various financial
the CEO & MD of IFCI flouting all the prevalent Rules and thereafter,
3. As per Rule 10 of the CCS (Pension) Rules, Shri Atul Kumar Rai was
required to seek Government approval in the prescribed Form No. 25 for
taking up post retirement commercial employment and was further
required to declare if he had any dealings with IFCI in the last three years
of his official career and make a mandatory declaration in the form of an
affidavit that he has not been privy to sensitive or strategic information in
the last three years of service. As per the Noting of the Finance Ministry.
Shri Atul Kumar Rai never submitted Form 25. Instead he submitted a
Mandatory Declaration on a blank paper not on Form 25 wherein, inter
alia, he made totally false declaration that-
"(b) I have not been privy to sensitive or strategic information in the
last three years of service, which is directly related to the areas of
interest or work of the organisation that I propose to join or to the
areas in which I propose to practice or consult. "
4. After the induction of Mr. Rai in IFCI, several irregularities including
financial have come into light like purchase of 5% stake in the MCX-SX by
IFCI management on a much higher price of Rs. 35 per share whereas the
Union Bank of India and the Bank of India acquired the shares of the
same company at Rs. 10 per share, sanction of Rs. 225 crores to Blue
Coast Hotels Ltd, a declared willful defaulter, repeated service extensions
given to a tainted officer etc.
5. Further, while releasing grants to IFCI, Ministry of Finance always
stipulated a condition that IFel would "not introduce performance linked
scheme/ESOP". However, this condition disappeared while releasing
grant of Rs. 220.31 cores in March, 2007 after the Board of IFCI had
already offered the post of Whole Time Director to Shri Atul Kumar Rai.
Shri Rai immediately after assuming the charge of CEO & MD, introduced
a Scheme of Performance Linked Incentive for the officers of lfCl in
August, 2007 and in this way rewarded himself, along with his associates
with hefty amounts of incentives.
4
Convertible Debentures of IFCI by converting the debentures into equity.
take steps to enforce its investment of Rs. 523 crores in Optionally
amount in its favour without holding any major stake in it and also it must
Undertaking & Repeal) Act, 1993 particularly when it has released huge
surviving provisions of the Industrial Finance Corporation (Transfer of
to the Union of India to exercise its control over the IFCI by virtue of the
prevalent rules and regulations. The Petitioner is further seeking direction
IFCI as his induction as Whole Time Member is in total breach of
warranto for removal of Mr. Atul Kumar Rai from the post of CEO & MD of
come into light in recent past in IFCI and also seeking a writ of quo-
independent investigation into various financial irregularities which have
7. Therefore, the Petitioner by way of the present writ petition is seeking an
Companies Act.
7097/2010 has held that the IFCI is a Public Financial Institution uncer the
authority under the RTI Act and the Hon'ble Division Bench in WP (C)
High Court in WP (C) No. 4596/2007 has held that the IFCI is a public
before the Parliament. Moreover, the Hon'ble Single Judge of the Delhi
is to be forwarded to the Central Government and the same is to be laid
during the year to the Central Government and further, every audit report
its profit and loss account and a report of the working of the corporation
that the IFCI will continue to submit its assets and liabilities together with
35 and 43 of 1948 Act will continue to be applicable which in turn ensures
surviving provision in Section 11 which ensures that Sections 33, 34, 34A.
would be pertinent hereto mention that in the aforesaid Repeal Act there is
statutory body and has converted into company under Companies Act. It
cannot interfere in the functioning of the institution as it is no longer a
Government is also taking stand at various forums that the Government
declared itself out of the purview of the RTI Act. At the same time the
independent company over which government has no control and has
bailout package from the Government, but still it is holding itself out as an
6. It is submitted that although IFCI is getting huge fund as grant/loan or
.--\_)
8. The Petitioner is a registered Society formed for the purpose of conducting
public interest litigation in an organized manner. Its founder President
was Late Shri V.M. Tarkunde and its Executive Committee consists of
several senior Advocates including Shri F.S. Narirnan, Shri Shanti
Shushan, Shri Anil Divan, Shri Rajinder Sachar, Shri Colin Gonsalves and
others. The Petitioner has earlier filed several important public interest
petitions including one challenging the allotment of oil and gas dealership
through the discretionary quota of the Minister as well as through the Oil
Selection Soard. The Petitioner had also challenged the transfer of
developed oil fields of Panna & Mukta from ONGC to Reliance and Enron.
The Petitioner has also successfully challenged the Government's
decision to disinvest and privatise the Government Oil Companies without
seeking Parliamentary approval. The Petitioner had also filed a Petition
seeking comprehensive administrative guidelines for securing the citizens'
right to information. The Petitioner also filed several other petitions on
important issues of public interest like on the health hazards of
consumption of Soft Drinks due to the chemical additives present in them
Recently, the Petitioner has filed PIL raising the issue of scam in allotment
of 2 G spectrum in which Court monitored CSI investigation was directed
by this Hon'ble Court. It also successfully challenged the illegal
appointment of Mr. P. J. Thomas as the Central Vigilance Commissioner.
Brief Facts of the Case:
9. The IFCI was originally established as a statutory Corporation under
Industrial Finance Corporation Act, 1948 to cater to the medium & long
term finance needs of the industrial sector. However. in order to increase
IFCI's accessibility to the market to raise resources on competitive terms
and to create a more leveled playing field across similar financial
intuitions, Industrial Finance Corporation (Transfer of Undertaking &
Repeal) Act, 1993 was passed vide which IFCI was converted into
Company under Companies Act. Copies of Industrial Finance Corporation
Introduction of the Petitioner:
,c
not introduce Performance Linked Scheme/ESOP. Copy of the letter dated
23.09.2003 is annexed hereto as Annexure P3 (Page Nos. ';J!J_ to
wherein it was clearly stipulated as one of the conditions that IFCI would
Officer about the sanction of payment of grant of Rs. 1573 crores to IFCI
13.On 23.09.2003 the Ministry of Finance wrote to the Pay & Accounts
to~.
strategic information about IFC!. Copy of the letter dated 22.07.2003 of
Shri Rai to Mr. Malia is annexed hereto as Annexure P2 (Page Nos.n
below Rs. 1 lakh. This clearly shows that he was privy to sensitive and
of the govt. guaranteed SLR bonds and retail borrowings of investors
IFCI that the Govt. has decided to take over the liabilities of IFCI in respect
12.0n 22.07.2003 Mr. Rai as Director (EA & IF) wrote to Mr. R. M. Malia, ED
New Delhi.
(IF), in the Department of Financial Services (DFS), Ministry of Finance.
11.ln Nov, 2002 Shri Atul Kumar Rai (IES 1985) was appointed as Director
before the Parliament.
is to be forwarded to the Central Government and the same is to be laid
during the year to the Central Government and further, every audit report
its profit and loss account and a report of the working of the corporation
that the IFel will continue to submit its assets and liabilities together with
35 and 43 of 1948 Act will continue to be applicable which in turn ensures
surviving provision in Section 11 which ensures that Sections 33, 34, 34A.
be pertinent hereto mention that in the aforesaid Repeal Act there is
was converted into Company as per Section 3 of the Repeal Act. It would
Finance Corporation (Transfer of Undertaking & Repeal) Act, 1993; IFCI
10.On the repeal of the Industrial Finance Corporation Act, 1948, by Industrial
Repeal) Act, 1993 are annexed hereto as Annexure P1 (Colly) (Page
Nos.a to1-.6_) .
Act, 1948 and Industrial Finance Corporation (Transfer of Undertaking &
S1--I
mentioned that IFCI would not introduce Performance Linked
Performance Linked Scheme/ESOP. Copy of letter dated 06.09.2005 is
annexed hereto as Annexure P7 (Page NOSa to ,0' ).Similarly. on
20.03.2006 the Ministry of Finance again while releasing grants to IFCi
but again with the same condition that IFCI would not introduce
17.On 06.09.2005 the Ministry of Finance once again released grants to IFCI
on the Board of IFCI in place of Shri Vinod Rai is annexed herewith and
marked as Annexure-P6 (Page Nos. ') , to~.
evidencing appointment of Shri Atul Kumar Rai as Government Nominee
copy of Page No. 10 of Annual Report for 2005-06 of IFCI dated ~illegible"
16.0n 21.08.2005 Shri Atul Kumar Rai succeeded Shri Vinod Rai, presently
CAG, as the Government Nominee Director on the Board of IFel Ltd. A
Scheme/ESOP. Copy of letter dated 05.01.2005 is annexed hereto as
Annexure P5 (Page Nos.~ toct(_).
with a condition that IFCI would not introduce Performance Linked
15.On 05.01.2005, the Ministry of Finance once again released grants to IFCI
Copy of the letter dated 29.01.2004 of Mr. Rai to Shri V.P. Singh, CMD.
IFCI is annexed hereto as Annexure P 4 (Page Nos.tiC. to ~b ).
favourable action in the matter."
would kindly have the issue taken up with the Board for
merger could be useful, is attached. I shall be grateful if you
and financial synergy. In this context, the option of merger
with Punjab National Bank may be contemplated by the
Board of IFe/. A note on the subject, bringing out how the
Sector Delhi based Bank with which the IFel has operational
14.On 29.01.2004 Shri Atul Kumar Rai as Director (EA & IFI), wrote to Shri
V.P. Singh, the then CMD of IFCI, vide his DO letter No. 2/16/2002-IFI
Part dated 29th January, 2004:
"... It appears that IFel does not appear to have long term
sustainability on a stand alone basis. It appears that the only
viable course of action is to merge IFel with a large Public
o
taking up commercial employment after retirement, is annexed herewith
prescribing procedure for seeking permission by the Govt. officers for
05.12.2006 by Ministry of Personnel, Public Grievances & Pension
Gazette Notification dated 23.11.2006 as notified also vide OM dated
sensitive or strategic information in the last three years of service. Copy of
declaration in the form of an affidavit that he has not been privy to
if he had any dealings with the organization which he proposes to join in
the last three years of his official career and make a mandatory
employment within two years of retirement and is further required to state
prescribed Form No. 25 for taking up post retirement commercial
Central Civil Service is required to seek Government approval in the
As per Rule 10 of the CCS (Pension) Rules, any govt. servant of Group A
attending certain personal and family matter.
voluntary retirement from the Government service, on the reasons of
20.Shri Atul Kumar Rai, vide his application dated 05.02.2007, sought for
rate of interest at "0"/6% and extending maturity period by 10-20 years.
investments (approximately Rs. 10,000 crores) in IFCI by re-setting the
PSU Banks and Financial/Insurance Institutions had to restructure their
out package of Rs. 5,220 crores to IFe!. At the instance of Government.
long term sustainability on a stand alone basis, sanctioned a financial bail-
taking a turnaround from its earlier stand that IFCI did not appear to have
Nominee Director on the Board of IFCI Ltd., the Government, strangely
19.Thus during the tenure of Shri Atul Kumar Rai as Director (IF), in the
Department of Financial Services (DFS) as well as the Government
Copy of the letter dated 18.11.2005 is annexed hereto as Annexure P9
(Page Nos. ~ to~.
has infused huge fund in IFCI but it has no control over it as it's a
company under Companies Act and the GOI has no shareholding in it.
Scheme/ESOP. Copy of letter dated 20.03.2006 is annexed hereto as
Annexure P8 (Page Nos. t02-to '0,-.18.The Finance Minister in a letter dated 18.11.2005 has admitted that GOI
inform DEA (Cadre Controlling Authority of IES).
him with effect from 31.05.07. Shri Rai has agreed to this. May
Shri Rai immediately. Hence it has been decided to relieve
of Parliament being in progress, it may be difficult to relieve
"Discussed with Secretary (FS). In view of the Budget Session
Notings :-
24.Shri Amitabh Verma, Joint Secretary (Admn.) in the Ministry of Finance
recorded on so" April, 2007, the following notings at page 37 of the
Govt. of India and taking up commercial appointment in IFCI, is annexed
herewith and marked as Annexure-P 14 (Page Nos. t:2~ tA 6 ).
the request of Shri Atul Kumar Rai for seeking voluntary retirement from
levels. A copy of the Department File notings of various dates dealing with
Notings (pages 33-37) between 06-02-2007 and 30-04-2007 at various
23.The application of Shri Atul Kumar Rai was examined in the Departmental
(Page Nos.UI__ to ,~, ).
to the Pay and Account Officer is annexed hereto as Annexure P 13
Scheme/ESOP. Copy of the letter dated 14.03.2007 of Ministry of Finance
removed the condition of not introducing Performance Linked
grant of Rs. Two Hundred Twenty Crore and Thirty One Lakh to IFCI
22.On 14.03.2007 the Ministry of Finance for the first time while releasing
was accepted.
fact was disclosed much later on 30.04.2007 when Mr. Rai's application
resolved to offer Mr. Rai the post of Whole Time Director, although this
21.The Board of Directors of IFCI at its meeting held on the th March, 2007,
nl to 111.).matters, is annexed herewith and marked as Annexure-P 12 (Page Nos.
voluntary retirement from service to attend certain personal and family
Copy of letter-dated 05.02.2007 of Shri Atul Kumar Rai giving notice for
blank Form No. 25 dated 'nil', is annexed herewith and marked as
Annexure-P 11 (Page Nos. ~ to fu.
\0and marked as Annexure-P 10 (Page Nos. lM to 115 ). A copy of
as whole time Director in IFCI (on a salary which was many times higher
than what he was drawing in Government). Copy of Departmental Noting
regulations, everybody approved the appointment of Shri Atul Kumar Rai
retirement from Government Service. Despite this, ignoring all rules and
Director in IFCI from the very next date of his release on voluntary
and was, therefore, not eligible for taking up the post of Whole Time
on the Board of IFCI was privy to all sensitive, strategic and policy matters
with policy matters related to IFCI and as a Government Nominee Director
was holding dual position of Director (IF) in the Ministry of Finance dealing
27.lt was well within the knowledge of everybody that Shri Atul Kumar Rai
Act.
correct as it came out subsequently in the information given under the RTI
applied for appointment in IFCI against an advertisement which is not
Kumar Rai, it was stated on page 43 of the Noting of DFS that he had
01.06.2007 at various levels. While examining the request of Shri Atul
Departmental Noting on pages 38 to 47 between 04.05.2007 to
appointment as a whole time Director in IFCi, was examined in the
26.The aforesaid request of Shri Atul Kumar Rai for taking up the
disclose this fact for 54 days (7.3.2007 to 29A.2007)
approved by the Board of IFCI far back on 7-3-2007, Shri Rai did not
him the post of Whole Time Director. Thus, though his appointment was
institution, at its meeting held on the ihMarch, 2007, had resolved to offer
seeking Government approval for joining IFCI as its Whole Time Director,
is annexed herewith and marked as Annexure-P15 (Page Nos. ~ to
~. In his above-referred Note dated 30-4-2007, Shri Atul Kumar Rai
stated that the Board of Directors of IFCI, which is a public financial
IFCI. A copy of Note dated 30-4-2007 submitted by Shri Atul Kumar Rai
April, 2007 itself, Shri Atul Kumar Rai submitted a Note seeking
permission for taking up the appointment as a Whole Time Director in
25.As soon as the above notings were recorded, on the same day i.e on 30!:'
,~.also indicated constitution' of Nomination committee for selection of CMD.
is annexed herewith and marked as Annexure-P 20 (Page Nos. ~ to
regarding terms of appointment of Shri V.P. Singh, ex-CMD of IFCI which
in IFCI, got himself re-designated as the CEO & MD w.e.f. t t" July, 2007.
A copy of Page NO.3 of Annual Report for 2006-07 of IFCI evidencing
appointment of Shri Atul Kumar Rai as Whole Time Director of IFCI w.e.f.
1st June, 2007 and re-designating him as CEO & MD from 11'hJuly, 2007.
is annexed herewith and marked as Annexure-P19 (Page Nos.IUb to
.HtlJ. A copy of the Memorandum No. 44312002-2003 dated 'nil"
29. Shri Atul Kumar Rai in sheer disregard of the norms for selection of CMD
regarding Govt. approval for taking up appointment in IFCI, is annexed
herewith and marked as Annexure-P18 (Page Nos.'~ to I~').
A copy of declaration dated 31.05.2007 submitted by Shri Atul Kumar Rai,
is annexed herewith and marked as Annexure-P17 (Page Nos.l1i to
tHJ. A copy of DFS Letter NO.A-19011/229/2002-Estt. dated 1-6-2007
consult. "
to join or to the areas in which I propose to practice or
the areas of interest or work of the organisation that I propose
in the last three years of service, which is directly related to
"(b) I have not been privy to sensitive or strategic information
Declaration dated 31-5-2007 wherein, inter-alia, he declared as under-
- dated on 31/5/2007). Shri Atul Kumar Rai submitted false Mandatory
Atul Kumar Rai in the Annexure enclosed therewith (which he signed back
taking up appointment in IFCI subject to the mandatory declaration by Shri
28.The competent authority of Government of India conveyed approval for
under RTI Act) of "illegible" dates, are annexed herewith and marked as
Annexure-P16 (Page Nos. I.z.S to!33l.
o-recorded in Department of Financial Services in the matter (obtained
o
Limited, United Spirits Ltd., Core Projects Ltd. and
Further it was asked regarding loans granted to United',
IFCI which were pledged to it by the promoter family.
got reduced following acquisition of its 17.4% shares by
that shareholding of Rajus in Maytas Infrastructure Ltd.
and acquisitions of such shares by IFC!. It was alleged
(i) Granting of Loans against shares pledged by promoters
points/allegations/issues interalia as under:
upon the IFCI Ltd. to furnish information/explanation on categorical
Complaint regarding affairs of IFCI, vide letter dated 22.04.2009 called
reference to copy of OM received from Lok Sabha Secretariat along with
33.The Office of the Registrar of Companies, NCT of Delhi & Haryana, in
loans/grants to IFC vide letter dated 2/4.03.2009 is annexed hereto as
Annexure P22 (Page Nos.~ to lii.J.
from 2001-02 to 2008-09. Copy of the information given regarding
32.The Ministry of Finance in RTI gave details of grant and loan given to IFCI
21 (Page Nos. , " to ~.
in Optionally Convertible Debentures is annexed hereto as Annexure P
invested Rs. 523 crores in Optionally Convertible Debentures. Copy of the
letter dated 12thDecember, 2007 regarding investment of Rs. 523 crores
December, 2007 confirmed the fact that the Government of India had
31.The Ministry of Finance vide its letter F. No.6/8/2004-IF-1 dated 12:-
Rashtriya Gramin Vikas Nidhi.
on the boards of MCX Stock Exchange, IFCI Financial Services Ltd. and
Factors Ltd., Institute of Leadership Development besides being member
Reconstruction Enterprise Ltd., IFCI Infrastructure Development Ltd.. IFel
subsidiaries of IFCI viz. IFCI Venture Capital Ltd., Assets Care and
nationally reputed institution like MDI, Gurgaon as well as Chairman of
virtue of the said post, Shri Atul Kumar Rai has become the Chairman of
Director in an Organization like IFCI can be borne out from the fact that by
30.The desire for usurping the post of Chief Executive Officer and Managing
o
(viii) Crores of Rupees spent on Diwali and New year Gifts.
officers.
(vii) Provision of Honda City cars to selective Junior Level
dated 21.08.2008 issued by IFCI.
Circular 99/2007 dated 09.08.2007 and No. 912008
Performance Linked Incentive to some officers vide HR
(vi) Astronomical pay packages and payment of
against norms.
Kumar Rai, have been appointed at exorbitant salaries
(v) Various persons who are favorites of the CEO, Shri Atul
contravention of RBI guidelines for PFis.
security dealing company. This was done In
is not an industrial concern but an investment and
crores to a Company namely DSP Merill Lynch, which
(iv) Shri Atul Kumar Rai sanctioned a Joan of Rs. 350
only against the deposit of earnest money.
transferred to a particular person (one Mr. KhandeJwal)
(iii) Good number of NPA Loan assets have been sold and
120 Crores to IFC!.
Business Times on 31.10.2008 indicating a Loss of Rs.
Hindalco Limited and a news item appeared in
subscribed and disbursed a sum of Rs. 130 Crores to
devolved on it and in addition to this, IFCI has
Limited to the extent of Rs. 250 Crare by IFCI which
the matter of underwriting shares of Tata Motors
company and wholetime Director Shri S.K. Mandai in
freezed by Shri Atul Kumar Rai, CEO and MD of the
(ii) Crores of Rupees belonging to public have been
these companies.
c~Lupin against pledge of shares by the promoters of
Shri Atul Kumar Rai for the month of May, 2007, is annexed herewtth and
markedasAnnexure-P25 (PageNosJ~ to/lj_).
Letter F.No.2/10/2009-Estt dated 03.09.2009 regarding Salary drawn by
confirmed vide Ministry of Finance letter F.NO.2/1 0/2009-Estt
dated 3rd September, 2009 in response of an RTI query. A copy of DFS
his monthly salary for the month of May, 2007 was Rs.41,064/- as
remuneration drawn by Sheri Atul Rai amounted to RS.86 lakhs whereas
35.As per Annual Report of IFCI for the year 2009-10, the annual
declaration. Copy of the letter dated 06.08.2009 of AIIFCEA is annexed
hereto as Annexure PZ4 (Page Nos.l62. to167 ).
seeking Mr. Rai's removal as he was appointed on the basis of his false
Association (All FCEA) to the Secretary, Department Economic Affairs
34.A letter was written by All India Industrial Finance Corporation Employees
IFCI on 23.04.2009, is annexed herewith and marked as Annexure-P23
(Page Nos. 14, to JiL).
Companies; NCT of Delhi & Haryana regarding affairs of IFCI received by
Copy of letter dated 22.04.2009 from the Office of the Registrar of
appraisal.
accounts etc. without due diligence and proper
sanctioning Loans, setting one time settlement of loans
(xii) Ruthlessly indulging in extravagant expenditure.
and part of profits.
(xi) Treatment of assistance from' government as income
subsidiary.
accompanied by Shri S.K. MandaI.
(x) Organization of New year party and get togethers in
January, 2009 in India Habitat Centre in honour of Shri
Rai, expenses of which were incurred by IFCI/IFCI
...--\>
(ix) Serious allegations of mis-deeds and irregularities on
the role and activities of Shri Atul Kumar Rai
o
fraud/corruption in purchase of 5% stake in MCX by the
07.12.2009, forwarded the representation pointing out
(iii) Lok Sabha M.P., Shri Ashok Kumar (Rawat) vide letter dated
{?-'- to lSlJ.annexed herewith and marked as Annexure-P 28 (Page Nos.
Brajesh Pathak addressed to the Finance Minister of India. is
issue. Copy of letter dated 07.12.2009 of Rajya Sabha M.P., Shri
dated 07.12.2009 to the Finance Minister of India on the aforesaid
Annexure-P 27 (Page Nos.lll to {JiJ.(ii) Similarly, one Rajya Sabha M.P., Shri Brajesh Pathak wrote letter
M.P.s, addressed to the Finance Minister is annexed hereto as
Kumar Rai. Copy of joint letter dated 07.12.2009 of Lok Sabha
India on the issue of fraudulent appointment obtained by Shri Atul
joint letter dated 07.12.2009 addressed the Finance Minister of
Chaudhary, Ramashankar Rajbhar & Surender Singh Nagar vide
(i) Lok Sabha M.Ps., Shri Ashok Kumar (Rawat), Arvind Kumar
follows:
them. Some of the MPs' complaints and the govt.'s response are as
the Prime Minister himself but no effective step whatsoever was taken by
complaints of MPs were acknowledged by the Finance Ministry as well as
share from Financial Technologies in July, 2009. Although these
stake in MCX by the Management of IFCI on much higher price @ 35 per
Declaration and also various financial irregularities like purchase of 5%
Kumar Rai as Whole time Director/CEO in IFCI on false Mandatory
Prime Minister regarding fraudulent appointment obtained by Shri Atul
several Member of Parliaments to the Finance Minister as well as the
37.lt is submitted that in last three years series of letters have been written by
declaration was sent by All FCEA to the Finance Minster. Copy of the letter
dated 12.10.2009 by AIIFCEA to the Finance Minister is annexed hereto
as Annexure P26 (Page Nos.'3t> to ~.
36.Another letter regarding perjury committed by Mr. Rai by making false
\k,
Prime Minister to the Rajya Sabha M.P., Shri Narayan Singh
Shri Narayan Singh Keshri. A copy of letter dated 22.12.2009 of
acknowledged two letters dated 17.12.2009 of Rajya Sabha M.P.
(vi) The Prime Minister under his signature vide letter dated 22.12.2009
Sabha M.P., Shri Ashok Argal, are annexed herewith and marked
as Annexure-P 31 (Page Nos. ~ to jf6) (Colly).
Prime Minister of India. Copies of letters dated 18.12.2009 of Lok
the aforesaid irregularities in the purchase of shares in MCX to the
letter of the even dated forwarded the representation pertaining to
Minister of India also. On the very same date, Shri Ashok Argal vide
said letter of the even date was even addressed to the Finance
thereby requested for proper investigation and action. A copy of the
committed by Shri Atul Kumar Rai, CEO & MD. IFel Ltd. and
18.12.2009 wrote to the Prime Minister of India pointing out perjury
(v) Another Lok Sabha M.P., Shri Ashok Argal vide letter dated
(Colly) (Page Nos.en to ~.
Kesari, are annexed herewith and marked as Annexure-P 30
letters dated 17.12.2009 of Rajya Sabha M.P., Shri Narain Singh
proper investigation and action in the aforesaid issue. Copies of
dated 07.12.2009 to the Prime Minister of India requesting for
(iv) One Rajya Sabha M.P., Shri Narain Singh Kesari wrote two letters
Sabha M.P., Shri Ashok Kumar (Rawat). is annexed herewith and
marked as Annexure-P 29 (Page Nos. ~to .l$3.
crores of public money. Copy of letter dated 07.12.2009 of Lok
was apprised that the said transaction amount to a fraud of Rs. 150
were not being quoted in any of the recognized stock exchanges. It
Rs. 10/- per share i.e. six weeks back, particularly when the shares
Union Bank of India (UBI) and Bank of India did the same thing @
Management of IFCI on much higher price @ 35 per share from
Financial Technologies in July, 2009 and the total cost involved
was Rs. 236 crores whereas there was report that in June, 2009.
\sr
action as appropriate.
Prime Minister to the Lok Sabha M.P., Shri Ashok Argal, is annexed
herewith and marked as Annexure-P 36 (Page Nos. ~ to
~. The PMO on 08.01.2010 forwarded the said letter dated
18.12.2009 to the Secretary, Department of Financial Services for
purchase of shares in MCX. A copy of letter dated 01.01.2010 of
committed by Shri Atu! Kumar Rai, CEO & MD, !FCI in the
Sabha M.P., Shri Ashok Argal relating to the aforesaid irregularities
01.01.2010 also acknowledged the Jetter dated 18.12.2009 of Lok
Kashyap, is annexed herewith and marked as Annexure-P35
(Page Nos. let" to~. The Prime Minister vide letter dated
01.01.2010 of Prime Minister to the Lok Sabha M.P.. Shri Virender
Sabha M.P., Shri Virender Kashyap. A copy of letter dated
acknowledged two letters dated 24.12.2009 & 26.12.2009 of Lok
(ix) Similarly, the Prime Minister vide letter dated 01.01.2010
appropriate.
Secretary, Department of Financial Services for action as
06.01.2010 forwarded the said letter dated 18.12.2009 to the
M.P., Shri Ashok Argal, is annexed herewith and marked as
Annexure-P34 (Page Nos. 'n to~. The PMO on
copy of letter dated 30.12.2009 of Prime Minister to the l.ok Sabha
letter dated 18.12.2009 of Lok Sabha M.P., Shri Ashok Argal. A
(viii) The Prime Minister vide letter dated 30.12.2009 acknowledged the
26.12.2009 of Lok Sabha M.P., Shri Virender Kashyap, are
annexed hereto as Annexure-P33 (Page Nos.\iL toM
India raised the same issues. Copies of letter dated 24.12.2009 and
(vii) Another Lok Sabha M.P., Shri Virender Kashyap vide letter dated
24.12.2009 and 26.12.2009 addressing to the Prime Minister of
Nos.~toru.
Keshri, is annexed herewith and marked as Annexure-P 32 (Page
.)
under Companies Act. A copy of letter dated 19th May, 2810 of Shri Namo
says that the govt. cannot do anything in this matter as IFCI is a company
Finance, Government of India in his D.O. letter No. 1/43/2009-stt(part file)
dated the 19th May, 2010 but in the said letter the Hon'ble Minister further
confirmed by Shri Nama Narain Meena, the Hon'ble Minister of State for
about IFCI for more than three years of his service has also been
virtue of which he had been privy to all sensitive and strategic information
(IF) and a Government Nominee on the Board of Directors of IFCI, by
42.The fact that Shri Atul Kumar Rai held strategic dual position of Director
( 2.00-~1),_
to.- -Annexure P40 (Page Nos..
crime. Copy of the story of TOI dated 06.04.2010 is annexed hereto as
85 crores by pledging its shares just three days before confessing his
of the story of Money life datec 11.03.2010 is annexed hereto as
Annexure P39 (Page Nos.' __ to,_ J. ( p~ 1,.., )41.The Times of India carried a story that Raju of Stayam got the loan of Rs
that IFCI sanctioned a loan of Rs. 225 crore to a defaulter company. Copy
Kumar (Rawat), is annexed herewith and marked as Annexure-P 38
(Page Nos.lii_ toBB.40.A magazine namely Money life came out with a story in which reported
dated 20.01.2010 of Finance Minister to the Lok Sabha M.P., Shri Ashok
informed him that he was having the matter looked into. A copy of letter
Kumar (Rawat), the Finance Minister vide his letter dated 20.01.2010
IFCI for the post to which Shri Atul Kumar Rai was appointed, is annexed
herewith and marked as Annexure-P 37 (Page Nos.~ toJ!339.ln response to letter dated 07.12.2009 of Lok Sabha M.P., Shri Ashok
IF-I dated 13.01.2010 confirming that no advertisement was issued by
Kumar Rai was appointed in IFCI). A copy of DFS Letter F NO.20/24/2009-
Advertisement was issued by IFCI for the post" (post on which Shri Atul
\\38.ln reply to an RTI query by one Smt. Savita Anand, New Delhi; DFS, vide
its letter No. 20/24/2009-IF-1 dated 13.01.2010 confirmed that "No
,,-.. \,_)
examined after taking comments from IFCI and actions would be taken
State in the Ministry of Finance replied that the Complaints wculd be
irregularities taking place in IFCI involving higher officials. the Minister of
47.ln parliamentary Question placed by one M.P. in the Lok Sabha regarding
(Colly) (Page Nos.m to~.
28.09.2010, are annexed herewith and marked as Annexure-P 45
23.08.2010 seeking for RTI information alongwith a copy of letter dated
been received and is under examination. A copy of letter dated
in regard to the IFCI's investment into MCX Stock Exchange Limited has
Ministry of Finance vide letter dated 28.09.2010 replied that the cornotaint
46.ln response to RTI information sought vide letter dated 23.09.2010. the
Bench. Copy of the judgment dated 17.08.2010 in WP (C) No. 4596 is
annexed hereto as Annexure P 44 (Page Nos.2l'2. to~.
said order is under challenge by way of Appeal before the Hon'ble Division
that IFCI satisfies the requirements of Section 2(h)(d)(i) of RTI Act. The
High Court of Delhi at New Delhi vide Order dated 17.08.2010 was held
provisions of RTI Act. However the Hon'ble Single Judge of the Hon'ble
way of W.P. (C) No. 4596/2007 that IFCI is not covered under the
45.Shri Atul Kumar Rai agitated before the Hon'ble High Court of Delhi by
(Page Nos.~&O to~.
given to the IFCI, copy of the same is annexed hereto as Annexure P43
Sabha in an answer to a question gave the detail of financial assistance
44.The Minister of State in the Ministry of Finance on 06,08,2010 in Lok
Central Act. Copy of the judgment dated 09.07.2010 in WP (C) No, 7097
is annexed hereto as Annexure P 42 (Page Nos.~to _m.
Financial Institution, inter-alia by virtue of its having created under a
judgment and Order dated 09.07.2010 in W.P.(C) No.7097 of 2008 titled:
Finite Infratech Ltd. Vs. IFCI Ltd & Ors was pleased to hold IFCI a Public
43.The Hon'ble Division Bench of the Hon'ble High Court of Delhi vide
Nos.~ to ~Q]).
L'C;Narain Meena, is annexed herewith and marked as Annexure-P 41 (Page
take action as deemed fit. Copy of letter dated 16.02.2011 of Rajya Sabha
and thereby requested to examine the said points expeditiously and to
declaration by Shri Atul Kumar Rai, amongst 15 points submi:ted therein:
Mandai after superannuation and obtaining appointment in IFCI on false
financial irregularities/frauds including second extension to Shri S.K.
16.02.2011 addressed to the Chief Vigilance Commissioner, pointed out
50.One Rajya Sabha M.P., Shri Mahmood A. Madani. vide letter dated
along with the series of earlier correspondences. are annexed herewith
and marked as Annexure-P48 (Page Nos,a~O to 2,,~6
regard. A copy of DFS Letter F.No.20/24/2009-IF-1 dated 02.02.2011
agencies and Banks, and presently no information was available in that
simple stereotype reply that the issue was under examination with various
under process, which was likely to take some more time; again made a
27.04.2010 of DFS that the matter regarding irregularities in IFCI was
reminder letter dated 29.12.2010 in respect of the earlier letter dated
Financial Services (DFS), vide its letter dated 02.02.2011 in re~ard to the
letter dated 04.05.2010, is annexed herewith and marked as Annexure
P47 (Colly) (Page NasI' " to ~
49.ln reply to RTI query by Smt. Savita Anand, New Delhi; Department of
copy of DFS Letter F.No.20/20/2010-IF-1dated 07.01.2011 along\'/ith the
of affairs in IFCI, the comments were invited which was still awaited. ,t.J.,
Industrial Finance Corporation Employees' Association regarding the state
replied that in regard to letter dated 04.05.2010 received fron ,A,!! India
Department of Financial Services (DFS) vide i:s letter dated ('7.01.201'
48.ln reply to an RTI query by one SITt. Savita Anand New Delhi-
annexed herewith and marked as Annexure-P 46 (Colly) (Page Nos.
Questionnaire alongwith Answer dated 19.11.2010 in Parliament, is
has been requested to send comments which was still awaited. A copy of
regarding corruption/irregularities in IFCI, it was simply replied that IFel
'"'I,;...._\wherever appropriate. In regard to a Complaint dated 22.07.2010
approach this Hon'ble Court by way of this petition.
Petitioners have no other equally efficacious alternative remedy than to
Court or any High Court, seeking the same or similar relief. The
54.That the Petitioners have not filed any other petition before this Hon'ble
from going into drain.
intervenes in the matter to prevent thousands of crores of public money
institution. Therefore, it is all the more necessary that this Hon'ble Court
the IFCI by the Govt. without holding any direct major stake in the
submitted that thousands of crores of public money have been invested in
being examined or they have asked the IFCI to send its comments. It is
Prime Minister, but every time they got the reply that their complaints were
of Parliaments have sent the complaints to the Finance Minister and the
expressly vide their letters, have taken no action so far. Several Members
acknowledged the intimation of the aforesaid irregularities in IFCI
the Finance Minister and the Prime Minister of India, despite having
53. It is really shocking that the various authorities and institutions including
of report dated 28.03.2011 published by "Bureaucracy Today", is annexed
herewith and marked as Annexure-P51 (Page Nos. ~~ .. '2rl, f
recommendations of the present CAG in exercise of his influence. A copy
Kumar Rai in IFCI flouting the Rules under active personal support and
issue of March 2011 exposed the illegality in appointment of Shri Atul
52.A reputed magazine "Bureaucracy Today" in an exclusive report in its
representation dated 21.02.2011, is annexed herewith and marked as
Annexure-P50 (Page Nos. tel to ~ "
dated 22.02.2011 of Rajya Sabha M.P., Shri N.K. Singh alo-iqwith the
for appropriate examination/consideration on the issue. Copy of letter
regarding perjury committed by Shri Atul Kumar Rai, CEO & MD, IFCI Ltd.
addressed to the Secretary, Financial Services forwarded representation
M.P., Shri Mahmood A. Madani, is annexed herewith and marked as
Annexure-P 49 (Page Nos.ma-MO51.One Rajya Sabha M.P., Shri N.K. Singh, vide letter dated 22.02.2011
A. Because the induction of Mr. Atul Kumar Rai i.e. Respondent No.4
as a Whole Time Member in the board of IFCI is completely iBegal
being in total breach of relevant rules and therefore, arbitrary and in
violation of Article 14 of the Constitution of India. As per Rule 10 of
the CCS (Pension) Rules, Shri Atul Kumar Rai was required to
seek Government approval in the prescribed Form No. 25 for taking
up post retirement commercial employment and was further
required to declare if he had any dealings with IFCI in the last three
years of his official career and make a mandatory declaration in the
form of an affidavit that he has not been privy to sensitive or
strategic information in the last three years of service. As per the
Noting of the Finance Ministry, Shri Atul Kumar Rai never submitted
Form 25. Instead he submitted a Mandatory Declaration on a blank
paper not on Form 25 wherein, inter-alia, he made totally false
declaration that " I have not been privy to sensitive or strategic
information in the last three years of service, which is directly
related to the areas of interest or work of the organisation that I
propose to join or to the areas in which I propose to practice or
consult. "
B. Because the act of the Respondents in approving the induction of
Respondent NO.4 as a Whole Time Member in the board of IFCI is
completely malafide also as it was well within the knowledge of
everybody that Shri Atul Kumar Rai was holding dual position of
Director (IF) in the Ministry of Finance dealing with policy matters
related to IFCI and as a Government Nominee Director on the
Board of IFCI was privy to all sensitive, strategic and policy matters
and was, therefore, not eligible for taking up the post of Whole Time
Director in IFel from the very next date of his release on voluntary
retirement from Government Service. Despite this, ignoring all rules
GROUNDS
particularly when it has released such a huge amount in its favour
control over the IFel by virtue of the surviving provisions
Therefore, it is high time that the Government must exercise its
Government will have continue to have control over IFC!.
surviving provision in Section 11 which ensures that the
in the functioning of the institution as it is no longer a statutory body
and has converted into company under Companies Act. It would be
pertinent hereto mention that in the aforesaid Repeal Act there is
taking stand at various forums that the Government cannot interfere
purview of the RTI Act. At the same time, the Government is also
government has no control and has declared itself out of the
holding itself out as an independent company over which
grant/loan or bailout package from the Government. but still it is
D. Because despite the fact that IFCI is getting huge fund as
the Constitution.
clearly arbitrary and unreasonable, thus, violative of Article 14 of
taking any action on the aforesaid complaints of corruption is
enquiry into those allegations. The inaction of the Respondents in
but no action whatsoever was taken for conducting an independent
Minister, though the complaints were duly acknowledged by them
Member of Parliaments to the Finance Minister and the Prime
per share, sanction of Rs. 225 crores to Blue Coast Hotels Ltd, a
declared willful defaulter, repeated service extensions given to a
tainted officer etc. Several complaints have been made by different
price of Rs. 35 per share whereas the Union Bank of India and the
Bank of India acquired the shares of the same company at Rs. 10
5% stake in the MCX-SX by IFCI management on a much higher
administrative and financial irregularities in IFCI like purchase of
C. Because there have been in recent past serious allegations of
and regulations, everybody approved the appointment of Shri Atul
Kumar Rai as whole time Director in IFCI.
o
(Prashant Shushan)
Advocate for the PetitionerDrawn on: 0 S \ ocl')..ot I
Filed on :9 -08-2011
Drawn by: R_()\4 IT K\)Nf\~ SI N6H
Filed by
In the interest of justice and for the facts and circumstances stated herein
above it is most respectfully prayed that this Hon'ble Court may graciously be
pleased to:
(a) issue a writ of quo warranto or any other direction against Respondent
No. 4 to remove him from the post of CEO & MD of IFCI as his
induction as Whole Time Director in IFCI was against the Rules;
(b) issue a writ of mandamus or any other direction to initiate investigation
into various allegations of administrative and financial irregularities in
IFCI and take consequent action thereon;
(c) issue a writ of mandamus or any other direction to direct Respondent
No.1 to exercise its control over the IFCI by virtue of the surviving
provisions of the Industrial Finance Corporation (Transfer of
Undertaking & Repeal) Act, 1993 and also to take steps to enforce its
investment of Rs.~23 crores in Optionally Convertible Debentures of
IFCI by converting the debentures into equity; and
(d) pass such other order or further orders as this Hon'ble Court may
deem fit in the facts and circumstances of the case;
PRAYER
without holding any major stake in it and also it must take steps to
enforce its investment of Rs. 523 crores in Optionally Convertible
Debentures by converting the debentures into equity.
'':;1
DEPONENT
VERIFICATION:I. the above named Deponent, do hereby verify that the
contents of the above affidavit are true and correct to my knowtedgeand believed no part of it is false and nothing material has beenconcealedtherefrom.
Verifiedat NewDelhion this 9th day of August2011,
DEPONENT
3. That theAnnexuresannexedto theWrit Petitionare true copiesof their respectiveoriginals.
knowledge.
the same are believedto be true and correct to the best of my
abovementionedWrit Petition from page No. 1 to 25 and
synopsis & List of dates and synopsis (Pages B to P). and
Applicationfor interimfrom pageNo.292 to 294 and I state that
That I have read and understood the contents of the2.
1. That I am the General Secretary of the Petitionerorganisation and being familiar with the facts andcircumstancesof the case am competent and authoriZed toswearthis affidaviton its behalf.
AfFIPAVITI, Kamini Jaiswal % Late Sh. R.S. Jaiswal, 43 Lawyers
Chambers,SupremeCourt of India, New Delhi - 110001, do herebysolemnlyaffirmanddeclareas under:
... RespondentsUnion of India & Ors.
VERSUS
... PetitionerIN THE MATTER OF:
Centre for Public Interest Litigation
IN SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDITION
WRIT PETITION (C) NO. OF 2011
illthe cause of action for such legal proceedings, wholly or in part, arises;]
of any legal proceedings against him under this Act; or
@ carries on the whole or part of his business, at the time of the commencement
illhas his registered office; or
respondent, anyone of them-
.ill the defendant or respondent, or where there is more than one defendant or
such Court) with in the local limits of whose jurisdiction,-
powers of the High Court are exercised by the Court of Judicial Commissioner,
(ba) 5[ " Court" means the High Court (or where there is no High Court and the
by this Act;
.(Ql" Corporation" means the Industrial Finance Corporation of India established"
.(g} " Board" means the Board of Directors of the Corporation;
subject or context,-
2. Interpretation. In this Act, unless there is anything repugnant in the
notification in the Official Gazette, appoint.
Ql It shall come into force on such date 4[ as the Central Government may, by
@ 2[ It extends to the whole of India 3[ .J'"'
illThis Act may be called the Industrial Finance Corporation Act, 1948 .
LShort title, extent and commencement.
It is hereby enacted as follows:--
impracticable;
accommodation is inappropriate or recourse to capital issue methods is
industrial concerns in India, particularly in circumstances where normal banking
purpose of making medium and long- term credits more readily available to
WHEREAS it is expedient to establish an Industrial Finance Corporation for the
An Act to establish the Industrial Finance Corporation of India.
ACT NO. 15 OF 1948 1 [27th March, 1948.]
THE INDUSTRIAL FINANCE CORPORATION ACT, 1948
A~~ E:_)( LJ~~ - ?\The Industrial FinanceCorporation Act, 1948
power;
!!xl 3[ the setting up of, or development of, an industrial area or an industrial
estate;]
.w. fishing or providing shore facilities for fishing or maintenance thereof;
(viii) assembling, repairing or packing any article with the aid of machinery or
any description or vehicles or vessels or motorboats or trailers or tractors;
.(jy} the hotel industry;
.M 3[ the generation, storage or distribution of electricity or any other form of
energy;]
(vi) the transport of passengers or goods by road or by water or by air or by
ropeway or by lift;
(vii) the maintenance, repair, testing or servicing of 3[ machinery or equipment] of
(iii) mining;
~ 2[ " industrial concern" means any limited company operative society
incorporated by a Central Act or an Act of the Legislature of a State or under any
law for the time being in force and registered in India which is engaged or to be
engaged in-
ill the manufacture, preservation or processing of goods;
@shipping;
1964 );]
(bb) 1[ " Development Bank" means the Industrial Development Bank of India
established under the Industrial Development Bank of India Act, 1964 (18 of
':'__C61. This Act has been extended to Goa, Daman and Diu by Reg. 12 of 1962, s. 3
and Sch.; Dadra and Nagar Haveli by Reg. 6 of 1963, s. 2 and Sch. I, and to the
Laccadive, Minicoy and Amindivi Islands by Reg. 8 of 1965, s. 3 and Sch.,
Extended to Kohima and Mokokchung districts in the State of Nagaland by Act
52 or 1975, s. 21. 2. Subs. by the A. 0.1950, for sub- section (2).3. The words"
except the State of Jammu and Kashmir" omitted by Act 28 of 1955, s. 2. 4. 1st
July, 1948, vide Notification No. F- 10 (1) (a)- F. 1 48, dated the 15th June, 1948,
Gazette of India, Extraordinary, 1948, p. 853. 5. Subs. by Act 2 of 1982, s. 2 (w.
e. f. 12.3.1982 )
established for the purposes of this Act.
illA Corporation to be called the Industrial Finance Corporation of India shaJI be
3. Establishment and incorporation of Corporation.
2 1[
of India Act, 1934 (2 of 1934.);]
1. Ins. by Act. 18 of 1964, s. 38 and Sch.1I (w. e. f.1-7-1964). 2. Subs. by Act 2
of 1982, s. 2 (w. e. f. 12- 3-1982).3. Subs. by Act 50 of 1986, s. 2 (w. e. f. 2- 2-
1987 ).4. Omitted by s. 2, ibid. (w. e. f. 2- 2- 1987 ). 5. Ins. by Act 74 of 1972, s.
® 5[ " State co- operative bank" has the same meaning as in the Reserve Bank
Schedule to the Reserve Bank of India Act, 1934 (2 of 1934 .);
ill " scheduled bank" means a bank for the time being included in the second
!ru "Reserve bank" menas the Reserve Bank of India:
.(Ql" prescribed" means prescribed by rules or regulations made under this Act;
operation;]
material to a manual, mechanical, chemical, electrical or any other like
any art or process for producing, preparing or making an article by subjecting any
the purposes of sub- clause (i), the expression" processing of goods" includes
activities specified under sub- clause (xvi), or any other matter. Explanation.- For
or product, whether in relation to any of the matters aforesaid, including any
(xvii) the research and development of any concept, technology, design, process
objects of this Act, by notification in the Official Gazette, specify in this behalf; or
(xvi) such other activity as the Central Government may, having regard to the
equipments, machinery or other assets, including vehicles, ships and aircraft;
(xv) leasing, sub- leasing or giving on hire or hire- purchase of industrial plants,
electronics;
(xiv) providing services relating to information technology: tele- communication or
(xiii) providing medical, health or other allied services;
other services or facilities for industry;
(xii) 3[ providing engineering, technical, financial, management, marketing or
of industrial growth; 4[
.(W providing special or technical knowledge or other services for the promotion
"~30ill The Corporation shall be a body corporate by the name of the Industrial
Finance Corporation of India, having perpetual succession and a common seal,
with power, subject to the provisions of this Act, to 2[ acquire, hold or dispose of]
property, both movable and immovable, and shall by the said name sue and be
sued.
4. Share capital and share- holders.
illThe authorized capital of the Corporation shall be ten crores of rupees divided
into twenty thousand fully paid- up shares of five thousand rupees each of which
ten thousand shares of the total value of five crores of rupees shall be issued in
the first instance, and the remaining shares may be issued with the sanction of
the Central Government from time to time as and when the Corporation may
deem fit.
(1A) 3[ On and from the commencement of the Industrial Finance Corporation
(Amendment) Act, 1972 , (74 of 1972 .) the authorised capital of the Corporation
shall stand increased to twenty crores of rupees, divided into forty thousand
shares of five thousand rupees each, and the shares representing the capital so
increased may be issued, with the sanction of the Central Government. as and
when the Corporation may deem fit.]
!1ID 4[ On or after the commencement of the Industrial Finance Corporation
(Amendment) Act, 1982 (2 of 1982 ), the authorised capital of the Corporation
may be increased to such amount not exceeding one hundred crores of rupees
as the Central Government may, from time to time, by notification in the Official
Gazette, fix.
.(19 The authorised capital increased under sub- section (18) shall be divided
into such number of shares of five thousand rupees each as may be necessary
and the shares representing the capital so increased may be issued with the
sanction of the Central Government as and when the Corporation may deem :-rt."]
.(1Ql 5[ On or after the commencement of the Industrial Finance Corporation
(Amendment) Act, 1986 (50 of 1986 ), the authorised capital of the Corporation
may be increased to such amount not exceeding two hundred and fifty crores of
Companies Act, 1956 (1 of 1956 ), its subsidiaries and such other institution or
General Insurance Corporation of India formed and registered under the
under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956 ) 6[ , the
insurance company" includes the Life Insurance Corporation of India established
.@l4[ In this section and in section 4A] the expression" insurance companies" or"
operative bank in accordance with the regulations made in this behalf.
company, any investment trust or any other like financial institution or any co-
Development Bank], 3[ the Reserve Bank], any scheduled bank, any insurance
be made by the Board in accordance with the regulations made in this behalf. 1[
ill Shares of the Corporation shall not be transferable except to 2[ the
ffi The allotment of shares to the applicants mentioned in sub- section (3) shall
of 1982 s. 3 (w. e. f. 12. 3. 1982 ). 5. Ins. by Act 50 of 1986. s. 3 (w. e. f. 2. 2.
1987 ).
1955, s. 4, for" acquire and hold". 3. Ins. by Act 74 of 1972, s. 3.4. Ins. by Act 2
1. Omitted by Act 2 of 1982, s. 2 (w. e. f. 12. 3. 1982 ). 2. Subs. by Act 28 of
the shares reserved for the class of institutions to which it belongs.
Corporation: Provided that no institution shall be allotted more than ten percent of
hundred shares, and co- operative banks for one thousand shares of the
investment trusts and other like financial institutions for two thousand five
subscribe for two thousand five hundred shares, and insurance companies,
Government in the Official Gazette in this behalf, scheduled banks may
Ql On application made before such date as may be notified by the Central
Reserve Bank shall each subscribe for two thousand shares.
!.2l Of the capital issued in the first instance, the Central Government and the
sanction of the Central Government as and when the Corporation may deem fit."]
and the shares representing the capital so increased may be issued with the
into such number of shares of five thousand rupees each a may be necessary
00 The authorised capital increased under sub- section (1D) shall be divided
Official Gazette, fix.
rupees as the Central Government may, from time to time, by notification in the
Provided further that if any such holder does not accept the shares so offered or
any co- operative bank, whether or not any such institution is a shareholder:
insurance company, any investment trust or any other like financial institution or
renounce the shares so offered to them in favour of any scheduled bank, any
date of such further issue: 1[ Provided that such holders shall have the right to
as nearly as circumstances admit, to the capital paid- up on those shares at the
see Gazette of India, Extraordinary, Part II, sec. 3 (ii), p. 643.
Reserve Bank" (w. e. f. 1- 8- 1964).3. Ins. by Act 74 of 1972, s. 3.4. Ins. by Act
66 of 1960, s. 3. 5. Subs. by Act 2 of 1982, S. 3 (VI. e. f. 12. 3. 1982) 6. Ins. by
s. 3 ibid. (w. e. f. 12- 3- 1982).7. Ins. by Act 18 of 1964, S. 38 and Sch. II (w. e.
f. 1- 7- 1964).8. 1- 8- 1964 vide Notification No. S. O. 2662, dated 29- 7- 1964.
1. Sub- sections (5) and (6) omitted by Act 18 of 1964, s. 38 and Sch II (w. e. f
1- 8- 1964 ). 2. Subs. by s. 38 and Sch. II, ibid., for" the Central Government the
shares of the Corporation in proportion,
thereof, are issued, such further shares shall be offered to the holders of the
@ If and when the remaining shares in the capital of the Corporation. or any part
of the paid- up capital of the Corporation.
that after such increases the Development Bank holds not less than frfty per cent.
shall stand allotted to and be subscribed by the Development Bank, so however
shares as the Central Government may specify in this behalf and all such shares
.(Ql the capital issued by the Corporation shall be increased by such number of
held by that Government and by that Bank;
Government and to the Reserve Bank respectively the face value of the shares
as compensation therefor the Development Bank shall pay to the Central
Reserve Bank shall stand transferred to and vest in the Development Bank and
@). all shares of the Corporation held by the Central Government and the
Gazette, appoint-
illOn such date 8[ as the Central Government may, by notification in the Official
4A. 7[ Transfer of shares and increase of capital.
Central Government in the Official Gazette in this behalf']
institutions dealing with general insurance business as may be notified by the
.J
to the Central Government whose decision thereon shall be final.]
whether a question is or is not a question of policy, the dispute shall be re':erred
ill 5[ If any dispute arises between the Development Bank and the Board as to
Bank].
instructions on questions of policy as may be given to it by 4[ the Development
ill In the discharge of its said functions, the Board shall be guided by such
public.
regard being had by it to the interests of industry, commerce and the general
ill The Board in discharging its functions shall act on business principles due
Corporation.
powers and do all acts and things which may be exercised or done by the
Corporation shall be entrusted to a Board of Directors which 3[ may exercise all
illThe general superintendence and direction of the affairs and business of the
6. Management.
1949 ).]
Insurance Act, 1938 , (4 of 1938 .) and the Banking Companies Act 1949 (10 of
of 1882 .) and also deemed to be approved secrities for the purposes of the
among the securities enumerated in section 20 of the Indian Trusts Act, 1982 , (2
in this section, the shares of the Corporation shall be deemed to be inctudec
purposes. Notwithstanding anything contained in the Acts hereinafter mentioned
SA. 2[ Shares of the Corporation to be deemed to be securities for certain
issuing the shares.
Central Government by notification published in the Official Gazette at the time of
the payment of the annual dividend at such minimum rate as may be fixed by the
guaranteed by the Central Government as to the repayment of the principal and
S. Guarantee by Central Government. The shares of the Corporation shall be
remain unallotted, they shall be subscribed for by the Development Bank.]
concurrence of the Development Bank: Provided also that"] if any such shares
therefor, the Board may allot such shares to any such institution with the
of any institution referred to in the preceding proviso within the time :ixed
does not exercise the right of renunciation in respect of any such shares in favour
.~---., ,.--.,1.7-\ 0._.;:__-
..
operative banks;
Corporation, other than 6[ the Development Bank], the scheduled banks and co-
@ two Directors elected in the prescribed manner by the shareholders of the
are shareholders of the Corporation;
.cru two Directors elected in the prescribed manner by the scheduled banks who
(bb) 5( one Director nominated by the Reserve Bank;'1
.(Ql two Directors nominated by 4( the Central Government];
(aa) four Directors nominated by 3[ the Development Bank];]
Director;]
Government after consultation with the Development Bank: Provided that the
same person may be appointed to function both as Chairman an das Managing
fgl 2[ a Chairman and a Managing director to be appointed by the Central
namely:-
ill]Board of Directors. The Board of Directors shall consist of the following,
10.1[
9. [ Managing Director.] Rep., ibid.
8. [Advisory Committee.] Rep., ibid.
Financial Corporations (Amendment) Act, 1955 (28 of 1955 ), s. 6.
7. [ Powers of Executive Committee.] Rep. by the Industrial and State
shall not be questioned in any Court of law.
decision of the Central Government as to the grounds for superseding the Board
Board in its place to function until a properly constituted Board is set up. The
Sch. II, ibid., for sub- section (4) (w. e. f. 1- 8- 1964 ).6. Subs. by s. 38 and Sch.
II, ibid., for" laid down by the Central Government" (w. e. f. 1- 8- 1964).
Director" omitted by Act 28 of 1955, s. 5. 4. Subs. by Act 18 of 1964, s. 38 and
Sch. II, for" the Central Government" (w. e. f. 1- 8- 1964 ). 5. Subs. by 38 and
2. 3. The words" with the assistance of an Executive Committee and a Managing
1. Subs. by Act 2 of 1982, s. 4 (w. e. f. 12. 3.1982) 2. Ins. by Act 45 of 1949, s.
supersede the Board and appoint a new
by the Development Bank], the Central Government shall have the power to
r> /,. (/', W--J .'
® If the Board fails to carry out the instructions on the question of policy 6{ given
writing.]
by giving to the Central Government notice of not less than three months ir
office at any time before the expiry of the term[ specified under] 3[ sub section (2;
3[ Chairman or the Managing Director] shall also have the right to relinquish his
writing or three months' salary and allowances in lieu of such notice: and the
under] 3[ sub- section (2) by giving him notice of not less than three months ir
or the Managing Director] at any time before the expiry of the term[ specifiec
Government shall have the right to terminate the term of office of the 3[ Chairman
(2A) 5[ Notwithstanding anything contained in sub- section (2). the Central
shall be eligible for reappointment.]
exceeding five years as the Central Government may specify in this behalf and
ill3[ The Chairman and the Managing Director shall hold office for such term not
Government.
determined 4[ by the Development Bank] with the approval of the Central
Director, such person] shall receive such salary and allowances as may be
the same person is appointed to function both as Chairman and as Managing
illThe Chairman of the Board 3[ or the Managing Director and. in a case where
10A. 2[ Chairman of the Board.
shall be deemed to have vacated their offices as such.]
holding office under clause (aa) or clause (b) immediately before the said date
ill 1[ On the date appointed under sub- section (1) of section 4A, the Directors
1- 8-1964).7. Cis. (f) and (g) and provisos omitted by Act 28 of 1955, s. 7
1964 s. 38 and Sch. II, for" the Central Government, the Reserve Bank" (w. e. f.
1964 ). 5. Ins. by Act 50 of 1986, s. 4 (w. e. f. 2- 2- 1987 ). 6. Subs. by Acy 18 of
38 and Sch. II, ibid., for" the Central Board of the Reserve Bank" (w. e. f. 1- 8-
38 and Sch. II, for" the Central Government" (w. e. f. 1- 8- 1964 ). 4. Subs. by s.
Subs. by Act 50 of 1986, s. 4 (w. e. f. 2- 2- 1987 ). 3. Subs. by Act 18 of 1964 s.
1. S. 10 re- numbered as subsection (1) of that section by Act 78 of 1952, s. 3. 2.
who are shareholders of the Corporation. 7[
£CAe~
.em two Directors elected in the prescribed manner by the co- operative banks
•..
successor has been elected: Provided further that 4[ such] a Director shall be
further that an elected Director shall be required to continue in his office until his
the first election; the Directors so to retire shall be determined by lot: Provided
the clauses (c), (d) and (e) of section 10 shall retire at the end of two years after
of the two Directors elected to represent the shareholders referred to in each of
illAn elected Director shall hold office for 3[ three years]: Provided that one out
illA nominated Director shall hold office during the pleasure of 2[ the authority
appointing him].
11. Term of office and retirement of Directors.
and the circumstances under which it was taken.]
make a written report to the Board 1[ containing a statement of the action taken
but in every such case, he shall, as soon as may be, after the action is taken.
section (2) was omitted by Art. 28 of 1955, s. 7. 2. Ins. by Act 28 of 1955, s. 8. 3.
Ins. by Act 50 of 1986, s. 5 (w. e. f. 2. 2.1987).4. Subs. by Act 18 of 1964. s. 38
and Sch. II, for" by the Board" w. e. f. 1- 8- 1964).5. Ins. by Act 73 of 1976, s. 3.
6. Ins. by Act 50 of 1956 s. 5 (w. e. f. 2- 2- 1987 ).
1. Ins. by Act 18 of 1964, s. 38 and Sch. " (w. e. f. 1- 8- 1964 ). Former sub-
and do all acts and things which may be exercised or done by the Board
matter as he deems necessary and for such purpose, he may exercise all powers
next meeting of the Board, then he may take such action"] in respect of that
Corporation may be prejudicially affected if such action is deferred until after the
matter which is within the competence of the Board and that the interests of the
which render it necessary for him to take immediate action in respect of any
in his absence, the Managing Director, is of opinion that circumstances exist
!.4l 3[ " Notwithstanding anything contained in sub- section (3), the Chairman or,
Board or the Chairman.]
duties as are assigned to him by this Act or as may be delegated to him by the
(3A) 6[ The Managing Director shall exercise such powers and discharge such
assigned to him by this Act or as may be delegated to him by the Board.
/~\ (I d."__/ '-
m The Chairman shall exercise such powers and discharge such duties as are
13. 5[ Removal of Director from office. 6[
@ is or has been convicted of any offence involving moral turpitude.
(Ql is found to be a lunatic or becomes of unsound mind; or
4[ of his debts] or has compounded with his creditors: or
fQl is, or at any time has been, adjudicated insolvent or has suspended payment
salaried official of the Corporation; or]
.(g} 1[ except in the case of 2[ the Chairman[ 3[ or the Managing Director), is a
12. Disqualification. No person shall be a Director who-
Committee". 8. Ins. by Act 50 of 1986 s. 6 (w. e. f. 2- 2- 1987 ). 9. Ins. by Act 1E,
of 1964, s. 38 and Sch. II (w. e. f 1- 8- 1964 ).
Subs. by Act 74 of 1972, s. 5, for" the Central Committee or any other
s. 6 (w. e. f. 2- 2- 1987 ). 4. Ins. by Act 78 of 1952 s. 4. 5. Subs. by Act 2 of 1982
s. 5 (w. e. f. 12- 3- 1982).6. Subs. by Act 66 of 1960, s. 4. for sub- section (4). 7.
by Act 78 of 1952, s. 4. for" the Central Government". 3. Subs. by Act 50 of 1986.
1. The words" or the Central Committee" omitted by Act 74 of 1972, s. 4. 2. Subs.
of the existence of any vacancy in, or any defect in the constitution of, the Board.
@ No act or proceeding of the Board shall be questioned on the ground merely
Development Bank].]
to any other Director who is a servant of the Government 9[ or of the
nothing in this sub- section shall apply to the Chairman 8[ , Managing Director] o'
by the Corporation, for attending meetings of such Committee: Provided that
meetings of the Board and, if they are members of 7[ any Committee] appointed
ffi 6[ Directors shall be paid such fees as may be prescribed for attending the
need be filled under this sub- section.
months] of the date of expiry of the normal term of office of an elected Director
his predecessor: Provided that no casual vacancy occurring within 5[ [ six
and a Director so elected shall hold office for the unexpired portion of the term of
ru A casual vacancy in the office of an elected Director shall be filled by election
rotation of elected Directors has begun.
eligible for re- election for not more than two full consecutive terms after the
Corporation in the efficient performance of its functions and in particular. for the
one or more Advisory Committee or Committees for the purpose of assistinc the
15. 1[ Advisory Committees. The Corporation may trorn time to time appoint
(Amendment) Act, 1972 (74 of 1972), s. 6.
14. [ Central Committee.] Rep. by the Industrial Finance Corporation
SUbs. by Act 28 of 1955, s. 12, for s. 13A, ins. by Act 78 of 1952, s. 7. (w. e. f.
18- 9- 1955).11. Ins. by Act 50 of 1986 s. 9 (w. e. f. 2- 2- 1987).12. Subs. by
Act 18 of 1964, s. 38 and Sch. II, for" with the Board" (w. e. f. 1- 8- 1964).
9- 1955 ). 7. Ins. by Act 18 of 1964, s. 38 and Sch. II (w. e. f. 1- 8- 1964 ). 8. Ins.
by Act 50 of 1986 s. 8 (w. e. f. 2- 2- 1987 ). 9. Ins. by Act 73 of 1976, s. 3. 10.
ibid., for s. 13. 6. Subs. by Act 28 of 1955, s. 11. for sub- section (1). (w. e. f 18-
1986, s. 7 (w. e. f. 2- 2- 1987 ). 4. Ins. by Act 78 of 1952, s. 5. 5. Subs. by s 6.
the Managing Director or the Deputy Managing Director". 3. Ins. by Act 50 of
1. Subs. by Act 78 of 1952, s. 5 for cl. (a). 2. Subs. by Act 28 of 1955. s. 10. for"
during his absence.]
12[ with the Development Bank], appoint another person to act in his place
vacation of his appointment, the Central Government may, after consultation
his duties or is absent on leave or otherwise in circumstances not involving the
Managing Director] is by infirmity or otherwise rendered incapable of carrying cut
13A. 10[ Casual vacancy of Chairman. If the Chairman of the Board 1i[or the
exonerate the absence.]
meetings of the Board without excuse sufficient in the opinion of the Board to
.(Ql is absent without leave of the Board from more than three consecutive
12;or
@l is, or has become, subject to any of the disqualifications mentioned in section
f2.l The Board may remove from office any Director who--
removal.]
section, unless he has been given an opportunity of showing cause against his
9[ Provided that no person shall be removed from his office, under this sub-
Bank] at any time remove the Chairman 8[ or the Managing Director] from office:]
ill The Central Government may 7[ after consultation with the Development
of 1972, s. 7. 6. Subs. by Act 28 of 1955, s. 14, for the former sub- section. 7.
Managing Director" 5. The brackets and letter" (a)" and cl. (b) omitted by Act 74
omitted by Act 74 of 1972, s. 7. 4. Subs. by Act 28 of 1955, s. 14, for" the
1. Subs. by Act 28 of 1955, s. 13, for the former sections, 2. Subs. by Act 2 of
1982, s. 6 (w. e. f. 12- 3- 1982 ) 3. The words" and of the Central Committee"
preside at the meeting.]
any Director elected by the Directors present from among themselves. shall
nominated by the Chairman in this behalf and in the absence of such nomination
Managing, Director being unable to attend such meeting, any other Director
Board, the Managing Director or, in the event of both the Chairman and the
@ 5[ The Chairman or, if for any reason he is unable to attend a meeting of the
which he is directly or indirectly interested.
® No Director shall vote on any matter conceming an industrial concem in
presiding shall have a second or casting vote.]
event of an equality of votes, the Chairman or, in his absence, any other person
.Ql6[ At a meeting of the Board 7[ each Director] shall have one vote. and in the
Directors and at least one an elected Director. 4[
Directors shall be present, of whom not less than two shall be nominatec
m To constitute a quorum at a meeting of 5[ the Board, not less than five
meetings shall be convened by 3[ the Chairman].
be prescribed: Provided that until regulations have been made in this behalf such
illMeetings of Board 3[ shall be held at such times and at such places as may
17. Meetings of the Board.
their appointment and service.]
efficient performance of its functions and determine the terms and conditions of
officers and other employees as it considers necessary or desirable for the
16. 2( Staff of Corporation. The Corporation may appoint such number of
or industries.
circumstances of, conditions prevailing in, and requirements of, particular areas
purpose of securing that those functions are exercised with due regard to the
e. f. 12- 3- 1982 ). 5. Ins. by Act 78 of 1952, s. 10. 5. Omitted by Act 2 of 1982 s
8 (w. e. f. 12.3. 1982).7. Added by Act 50 of 1986 s. 11 (w. e. f. 2. 2. 1987 ),8
or the Reserve Bank" (w. e. f. 1- 8- 1964 ). 4. Omitted by Act 2 of 1982. s. 7 (w
1987 ). 3. Subs. by Act 18 of 1964, s. 38 and Sch. II, for" the Central Government
1. Ins. by Act 43 of 1957, s. 3. 2. Ins. by Act 50 of 1986, s. 10 (w. B. f. 2- 2-
for the purpose of raising its working capital. 11[
ill The Corporation may issue and sell bonds and debentures carrying interest
21. Borrowing powers.
development institution or organisation]
said Unit Trust of India, or the shares, bonds or debentures of any financial or
9[ and the Corporation may also subscribe to, or purchase. 10[ the units of the
Trust of India established under the Unit Trust of India Act 1963 (52 of 1963 ).
the approval of the Central Government, contribute to the initial capital of the Unit
securities of the Central Government or of any State Govemment and may. with
20. 8[ Investment of funds. The Corporation may invest its funds in the
the approval of the Reserve Bank, with any bank outside India]
treasury 5{ or 6[ with a scheduled bank or a State Co- operative Bank 7[ or, with
Reserve Bank or with any agency of the Reserve Bank other than a Government
19. Deposit Accounts. The Corporation may open Deposit Accounts with the
offices or agencies in other places in India.
Delhi and offices in Bombay, Calcutta, Kanpur and Madras, and may, 4[ establish
18. Offices and agencies. The Corporation shall establish its head office ir,
be, of the said section.]
Director nominated under clause (aa) or clause (b) 2[ or clause (bb)], as the case
such person shall, for all purposes of the said meeting, be deemed to be a
as the case may be, may depute any other person to attend the said meeting and
2[ or clause (bb)] of section 10 is unable to attend any meeting of :he Board,
3[ The Development Bank or the Central Government] 2[ or the Reserve Bank],
.(§) 1[ If, for any reason, a Director nominated under clause (aa) of clause (b)
(w. e. f. 2- 2- 1987 ).
Subs, by Act 74 of 1972, s. 7, for certain words. 8. Subs. by Act 50 of 1986, s. 10
(3), ins. by Act 78 of 1952, s. 11. 3. Omitted by Act 50 of 1986. s. 13 (w. e. f. 2. 2.
1. Ins. by Act 74 of 1972, s. 9.2. Subs. by Act 28 of 1955, s. 15, for sub- section
on such terms and conditions as may be agreed upon.
from any other authority, institution, organisation or trust within or outside India]
(52 of 1963 ), or, with the general or special approval of the Central Government.
Unit Trust of India established under section 3 of the Unit Trust of India Act, 1963
Corporation of India formed and registered under the Companies Act, 1956 . the
the Life Insurance Corporation Act, 1956 (1 of 1956 ), the General Insurance
Bank}, 5[ the Life Insurance Corporation of India established under section 3 of
this Act, borrow money from the Central Government 4[ or the Development
.{4l The Corporation may also, for the purpose of carrying out its functions under
which the money is so borrowed: 3[
and maturing within a period not exceeding eighteen months from the date on
Corporation under sub- section (1) and guaranteed by the Central Government
Government of any maturity or against bonds and debentures issued by the
the date on which the money is so borrowed, against securities of the Central
.{Ql repayable on the expiry of fixed periods not exceeding eighteen months from
Central Government or of any State Government; or
days from the date on which the money is so borrowed, against securities of tre
(g} repayable on demand or on the expiry of fixed periods not exceeding ni-iety
this Act, borrow money from the Reserve Bank,-
m 2[ The Corporation may, for the purpose of carrying out its functions under
and debentures of the Corporation as are issued tothe Development Bank.]
guarantee by the Central Government shall be required in respect of such bonds
Board at the time the bonds and debentures are issued: 1[ Provided that no such
rate as may be fixed by the Central Government on the recommendation of the
Government as to the repayment of principal and the payment of interest at such
.(2l Bonds and debentures of the Corporation shall be guaranteed by the Central
Subs. by Act 52 of 1963, s. 44 and Sch. II, for s. 20 (w. e. f. 1- 2- 1964 ).9. Ins.
by Act 74 of 1972, s. 8. 10. Subs. by Act 50 of 1986 s. 12 (w. e. f. 2. 2. 1987 ).
11. Omitted by s. 9, ibid. (w. e. f. 12.3.1982) .
the following kinds of business, namely:-
shall, subject to the provisions of this Act, be authorised to carry on and transact
23. Business which the Corporation may transact. 5[ 6[ The Corporation
generally or specially, be approved by the Development Bank.]
from the date of the making of the deposit on such terms and conditions as may,
repayable after the expiry of a period which shal! not be less than twelve months
22. 4[ Deposits with the Corporation. The Corporation may accept deposits
by endorsement or in any other manner.]
by the execution or issue of any instrument, or by the transfer of any instrument
granted, or any amount recoverable, by such institution, either in whole or in part.
(including any other rights incidental thereto), in relation to any loan or advance
institution as defined in section 4A of the Companies Act, 1956 (1 of 1956 ).
acquire, by transfer or assignment, the rights and interests of any public financial
21C. 3[ Power to acquire rights. The Corporation shall have the right to
trustee for the transferee.]
transferred, and the Corporation may, notwithstanding such transfer, act as the
rights and interests in relation to such loan or advance may be lawfully
transfer of any instrument by endorsement or in any other manner in which the
either in whole or in part, by the execution or issue of any instrument. or by the
granted, or any amount recoverable, by it may be transferred by the Corporation,
(including any other rights incidental thereto) in relation to any loan or advance
21B. Power to transfer rights. The rights and interests of the Corporation
Act, 1882 (2 of 1882 ), the Insurance Act, 1938 (4 of 1938 ), and the Banking
Regulation Act, 1949 (10 of 1949).
always to have been, approved securities for the purpose of the Indian Trusts
debentures issued or sold by the Corporation shall be, and shall be deemed
21A. 2[ Bonds and debentures to be approved securities. Notwithstanding
anything contained in any other law for the time being in force. the bonds and
1[
1987) 4. Ins. by Act 18 of 1964, s. 38 and Sch. II (w. e. f. 1- 8- 1964) 5. Ins. by
Act 50 of 1986, s. 13 (w. e. f. 2- 2- 1987 ).
1. Subs. by Act 2 of 1982, s. 12 (w. e. f. 12. 3. 1982 ). 2. Omitted by Act 50 of
1986, s. 14 (w. e. f. 2. 2. 87). 3. Proviso omitted by Act 74 of 1972, s. 11.4. Ins.
commission as may be agreed upon; 3[
.(g} receiving in consideration of the services mentioned in clauses (a) to (f), such
concern;]
ill 1[ subscribing to, or purchasing, the stock, shares or bonds of any industrial
behalf]
stocks, shares, bonds or debentures subscribed, by any of them or on thei"
business with an industrial concern in respect of loans or advances granted, 7[ 0,"
international or national institution or organisation] in the transaction of any
International Bank for Reconstruction and Development 6[ or any othe-
.{§l acting as agent for the Central Government or, with its approval. for the
advances granted by it to industrial concerns;]
(da) 5[ transferring for consideration any instrument relating to loans and
debentures which it may have to take up in fulfilment of its obligations theretc):
concerns 5[ and retaining as part of its assets, any stocks, shares, bonds a"
@ underwriting the issue of stock, shares, bonds or debentures by industrial
approval of the Central Government;
foreign currency: Provided that no such guarantee shall be given without the prio.
banks or financial institution in any country outside India by incustrial concerns in
{Ql guaranteeing 4[ xxx loans raised from, or credit arrangements made with, any
.(Q} 1[ guaranteeing deferred payments due from any industrial concern'] 3[
Government in this behalf]
Banks or such other financial institutions as may be notified by the Central
® loans raised by industrial concerns from scheduled banks 1[ 5[ Co- operative
1. Omitted by Act 2 of 1982, s. 9 (w. e. f. 12. 3. 1982 ). 2. Ins. by Act 74 of 1982,
s. 10. 3. Ins. by Act 2 of 1982, s. 10. (w. e. f. 12. 3. 1982 ). 4. Subs. by s, 11, ibid.
(w. e. f. 12.3.1982).5. Subs. by Act 66 of 1960, s. 5, for sub- section (1). 6.
Omitted by Act 2 of 1982, s. 12. (w. e. f. 12. 3. 1982 ).
.(illoans raised by industrial concerns which 6[ are floated in the public market;
I ;
U_' ~\
@lguaranteeing 6[
...._)
under this Act. 2[ or under any other law for the time being in force] 9[
or consequential upon the exercise of its powers or the discharge of its duties
Ull 5[ ] generally, the doing of all such matters and things as may be incidental to
recommendation of the Development Bank, authorise; and
.{Ql 8[ ] doing any kind of business which the Central Government may. on the
financial assistance for such promotion or development] 7[
of which is the promotion or development of industry in India, or the grant of
including the business, assets and liabilities of any institution the principal object
.(n). 5( ] acquiring with the approval of the Development Bank the undertaking
or by any other law for the time being in force;]
.{.m} Performing functions entrusted to, or required of, the Corporation by this Act
ill 1[ providing consultancy and merchant banking services in and outside India:]
industrial concern for the promotion, management or expansion of any industry:
ill. providing technical,[ legal, marketing] 2[ and administrative assistance to ani
connection with the development of industry;
or investments and undertaking and carrying on techno- economic studies in
.ill 2[ undertaking research and surveys for evaluating or dealing with marketing
converted into stocks or shares;]
1[ loan, advance or debenture] as at the time when the amounts are sought to be
debenture shall mean the principal, interest and other charges payable on such
amounts outstanding thereon", used in relation to any 1[ loan. advance or
debenture is repayable. 4[ Explanation.- In this clause, the expression" the
into stock or shares of that concern within the period the loan, advance or
amounts outstanding thereon may be convertible at the option of the Corporation]
subscribing to 2[ , or purchasing,] debentures of, an industrial concern, 3[ the
deemed to preclude the Corporation from granting loans or advances to, cr
of industrial concerns:] Provided that nothing contained in this clause shall be
ill granting loans or advances to, 1[ or subscribing to, or purchasing, debentures
by Act 50 of 1986, s. 14 (w. e. f 2- 2- 1987).5. Ins. by Act 74 of 1972 s. 11.6.
Ins. by Act 50 of 1986 s. 14 (w. e. f. 2- 2- 1987 ). 7. Subs. by s. 14, ibid. (w. e. '.
2- 2- 1987 ). 8. CI. (h) omitted by s. 11, ibid.
25. Power to impose conditions for accommodation.
ill In entering into any arrangement under section 23 with an industrial concern.
the Corporation may impose such conditions as it may think necessary or
expedient for protecting the interest of the Corporation, and securing that the
accommodation granted by it is put to the best use by the industrial concern.
.(2l 2[ Where any arrangement entered into by the Corporation with an inustrial
concern provides for the appointment by the Corporation of one or more
Directors of such industrial concern, such provision and any appointment of
Directors made in pursuance thereof shall be valid and effective notwithstanding
anything to the contrary contained in the Companies Act, ~956 (1 of 1956 ), or in
any other law for the time being in force or in the memorandum. articles of
association or any other instrument relating to the industrial concern, and any
provision regarding share qualification, age limit, number of directorships
removal from office of Directors and such like conditions contained in any such
law or instrument aforesaid, shall not apply to any Director appointed by the
Corporation in pursuance of the arrangement as aforesaid.
1. Omitted by Act 2 of 1982, s. 13 (w. e. f. 12.3. 1982 ).2. Subs. by Act 74 of
1972, s. 13 for sub- section (2).
ru Any Director appointed in pursuance of sub- section (2) shall-
@) hold office during the pleasure of the Corporation and may be removed or
substituted by any person by order in writing by the Corporation:
.au not incur any obligation or liability by reason only of his being a Director or for
anything done or omitted to be done in good faith in the discharge of his duties
as a Director of anything in relation thereto;
1. Subs. by Act 2 of 1982, s. 122. Ins. by s. 12, ibid. (w. e. f. 12- 3- 1982).3.
Subs. by Act 74 of 1972, s. 11, for certain words. 4. Ins. by s. 11, ibid. 5. Ins. by
Act 18 of 1964, s. 38 and Sch. II (w. e. f. 1- 8- 1964 ). 6. Relettered by Act 2 of
1982, s. 12 (w. e. f. 12. 3.82).7. Ins. by Act 74 of 1972, s. 11. for certain words.
8. The word" and" omitted by s. 11, ibid. (w. e. f. 12- 3- 1982 ). 9. Omitted by Act
2 of 1982, s.12 (w. e. f. 12- 3-1982).
1[
the commencement of the Industrial Finance Corporation (Amendment) Act.
ill shall not apply to any transaction relating to the business entered into prior to
.Q} The provisions of sub section (2)-
concern, whichever is less.
five lakhs of rupees or five per cent. of the paid- up share capital of the industrial
the industrial concern, the aggregate amount paid- up on which either exceeds
] (1 of 1956 ) of such Director, whether singly or taken together, in the shares of
by any relative( as defined in clause (41) of section 2 of the Companies Act, 1956
the beneficial interest held by one or more of the Directors of the Corporation or
Explanation.-" Substantial interest", in relation to an ndustrial concern. means
66 of 1960, s. 7. 3. Ins. by Act 78 of 1952, s. 15. 4. Ins. by Act 74 of 1972. s. 14.
1. Renumbered by Act 74 of 1972, s. 14. 2. CI. (b) and the proviso omitted by Act
other law, by reason only of such nomination or election, as the case m~y be.
the Companies Act, 1956 (1 of 1956 ), or by a Corporation established by any
concern by Government, or a Government company as defined in section 617 of
.{ill. is elected on the Board of such concern by virtue of shares held in the
of 1956 ), or by a Corporation established by any other law, or
Government company as defined in section 617 of the Companies Act, 1956 (1
ill is nominated as a Director on the Board of such concern by Govemment, or a
shall not apply to any industrial concern if any Director of the Corporation-
Corporation together hold substantial interest; Provided that this sub- section
agent, employee or guarantor or in which one or more Directors of the
concern of which any of the Directors of the Corporation is a Director, manager,
m 4[ The Corporation shall not enter into any kind of business with any industrial
.(g) 3[ grant any loan or advance on the security of its own shares.]
.(gl accept deposits except as provided by this Act; 2[
ill] Prohibited business. The Corporation shall not-
26.1[
computing the number of Directors liable to such retirement.]
./ I.'-L._J.--....
\_ ..(g) not be liable to retirement by rotation and shall not be taken into account for
1972 (74 of 1972 ), and all such business and any transaction in relation thereto
may be implemented or continued as if that Act had not come into force;
.{ill shall apply only so long as the conditions precedent to such disability as set
out in the said sub- section continue.]
(iii) 1[ shall not apply to any industrial concern in respect of which the Corporation
is satisfied that it is necessary, in the public interest, to enter into business with
that concern: Provided that such business shall be entered into in accordance
with and subject to such conditions and limitations as may be prescribed by
regulations made in this behalf.]
27. 2[ Loans in foreign currency.
illNotwithstanding anything contained in the Foreign Exchange Regulation Act.
1947 (7 of 1947 ), or in any other enactment for the time being in force relating to
foreign exchange, the Corporation may, for the purpose of granting loans or
advances to industrial concerns, borrow, with the previous consent of the Central
Government, foreign currency from the International Bank for Reconstruction ar d
Development 3[ or any bank or financial institution in India or in any foreign
country] or otherwise.
illThe Central Government may, where necessary. guarantee all loans taken by
the Corporation under sub- section (1) as to the repayment of the principal and
the payment of the interest and other incidental charges.
.Q.l 4[ All loans and advances granted to industrial concerns by the Corporation
out of foreign currency borrowed under sub- section (1) shall be expressed n
terms of foreign currency as equivalent of Indian currency, calculated ·n
accordance with the rate of exchange prevailing at the time of grant thereof, and
the amount due there- under shall be repayable in equivalent Indian currency'.
calculated
1. Ins. by Act 2 of 1982, s. 14 (w. e. f. 12.3. 1982 ). 2. Subs. by Act 78 of 1952.
s. 16, for s. 27. 3. Ins. by Act 43 of 1957, s. 8. 4. Subs. by Act 74 of 1972, s. 15.
for sub- sections (3) and (4).
in accordance with the rate of exchange prevailing at the time of repayment of
such loan or advance.
transferred 2[ as if the transfer] had been made by the owner of the property.
1[ under sub- section (1) shall vest in the transferee all rights in or to the property
illAny transfer of property made by the Corporation in exercise ofrts powers
ibid., for certain words. 4. Subs. by Act 28 of 1955, s. 19, for" right to sell".
1. Ins. by Act 43 of 1957, s. 9. 2. Ins. by Act 74 of 1972, s. 16.3. Subs. by s. 16.
mortgaged, hypothecated or assigned to the Corporation.
4[ right to transfer by way of lease or sale] and realise the property pledged,
over the management, or possession, or both, of the concern], as well as the
its agreement with the Corporation, the Corporation shall have the 3[ right to take
guarantee given by the Corporation] or otherwise fails to comply with the terms of
or any instalment thereof] 2[ or in meeting its obligations in relation to any
under an agreement makes any default in repayment 1[ of any loan or advance
illWhere any industrial concern which is under a liability to the Corporation
28. Right of Corporation in case of default
decided by the Central Government whose decision thereon shall be final.]
fluctuation as aforesaid is a normal market fluctuation or not, the same shall be
in foreign exchange. Explanation.- If any question arises as to whether any
Government in respect of fluctuations other than the normal market fluctuations
fill shall be reimbursed by, or paid to, as the case may be, the Central
foreign exchange;
ill shall be borne by the Corporation in respect of normal market fluctuations in
.(Ql after the expiry of the period specified in clause (a),-
recipients of such loans and advances;
whichever is longer, shall be reimbursed by, or paid to, as the case may be, the
industrial concern or the period of actual repayment thereof by the concem,
!g} during the period within which the loan or advance is repayable by the
fluctuations in the rate of exchange accruing-
with its repayment to the concerned foreign lending agency, on account of any
sub- section (1) for the purpose of granting loans and advances under this Act or
(~ '--\LJ
ffi Any loss or profit in connection with any borrowing of foreign currency under
78 of 1952, s. 18, for certain original words.
ibid. 8. The words" of the owner" omitted by Act 43 of 1957, s. 9. 9. Subs. by Act
incurred by it". 6. Certain words omitted by Act 74 of 1972, s. 16.7. Ins. by s. 16.
74 of 1972, s. 16, for certain words. 5. Subs. by Act 43 of 1957, s. 9. for" properly
by s. 19, ibid., for" as if the sale". 3. Ins. by Act 78 of 1952, s. 17.4. Subs. by Act
1. The words" of sale and realisation" omitted by Act 28 of 1955, s. 19. 2. Subs.
the Corporation in the matter of the loan or advance; or
.(Ql if the industrial concern has failed to comply with the terms of its contract witt-
particular was given in the application for the loan or advance: or
.(ill if it appears to the Board that false or misleading information in any materia:
advance to discharge forthwith in full its liabilities to the Corporation,-]
writing, require any industrial concern to which it has granted any lean or
anything in any agreement to the contrary, the Corporation may, by notice in
29. Power to call for repayment before agreed period. 9[ Notwithstanding
sue and be sued in the name 8[ of the concern.
owner of such concern for purposes of suits by or against such concern and shall
concern under the provisions of sub- section (1), it shall be deemed to be the
~ Where the Corporation takes over the management 7[ or possession] of a
the money so received shall be paid to the person entitled thereto.]
and, secondly, in discharge of the debt due to the Corporation, and the residue of
in trust to be applied, firstly, in payment of such costs, charges and expenses
received by it 6[ shall, in the absence of any contract to the contrary, be held by it
thereto] shall be recoverable from the industrial concern, and the money which is
opinion of the Corporation, have been properly incurred by it] 4[ as incidental
provisions of sub- section (1), all costs, charges and expenses 5[ which, in the
(3A) 3[ Where any action has been taken against an industrial concern] under the
held by it, as it had with respect to the original goods.
manufactured or produced wholly or partly from goods forming part of security
Ql The Corporation shall have the same rights and powers with respect to goods
III ~ _.......''____'_ ,
.)D
the equipment being removed from
.(.Q} for an ad interim injunction where there is apprehension of the machinery or
or
.(Ql for transferring the management of the industrial concern to the Corporation,
assigned to the Corporation as security for the loan or advance, or
iru for an order for the sale of the property pledged, mortgaged, hypothecated or
reliefs, namely:-
Board in this behalf may apply to 6[ the Court] for one or more of the following
of 1882 )], any officer of the Corporation generally or especially authorized by the
section 28 of this Act and] of section 69 of the Transfer of Property Act, 1882 (4
fails to make such repayment, then, without prejudice to the provisions 5[ 0:
repayment of any loan or advance under section 29 and the industrial concert-
where the Corporation requires an industrial concern to make immediate
otherwise fails to comply with the terms of its agreement with the Corporation or
meeting its obligations in relation to the guarantee given by the Corporation] or
default in repayment of any loan or advance or any instalment thereof 4[ or in
ill 3[ Where an industrial concern, in breach of any agreement, makes any
30. Special provisions for enforcement of claims by the Corporation.
ill if for any reason it is necessary 2[ to protect the interests of the Corporation.
the premises of the industrial concern without being replaced; or
equipment], whether forming part of the security or otherwise, is removed from
!ru if without the permission of the Board, 1[ any machinery, plant or other
satisfaction of the Board should be given and such security is not given;] or
in value to such an extent that, in the opinion of the Board, further security to the
by the industrial concern to the satisfaction of the Corporation; 1[ or depreciates
Corporation as security for the loan or advance is not insured and kept insured
.(Ql if the property pledged, mortgaged, hypothecated or assigned to the
thereof; or
pay its debts or that proceedings for liquidation may be commenced in respect
.(.Q} if there is a reasonable apprehension that the industrial concern is unable to
•..J
sections (4) and (6), 1[ the Court] shall forthwith make the ad riterirn order
ill If no cause is shown on or before the date specified in the notice under sub-
order of attachment should not be made absolute or the injunction confirmed.
concern to show cause] on a date to be specified in the notice why the ad interim
application 4[ and the evidence, if any, recorded by it calling upon the industria:
issue to the industrial concern a notice accompanied by copies of the order. the
Court] may, if 3[ it] thinks frt, examine the officer making the application.
.@. At the same time as 3[ it] passes an order sub- section (3), 1[ the Court] shall
@ Before passing any order under sub- section (3) or sub- section (4). 1[ the
be transferred to the Corporation.
specified in the notice why the management of the industrial concern should not
issue a notice calling upon the industrial concern to show cause on a date to be
industrial concern from transferring or removing its machinery or equipment and
section (1) 1[ the Court] shall grant an ad interim injunction restraining the
ffi Where the application is for the relief mentioned in sub- clause (b) of sub-
equipment.
restraining the industrial concern from transferring or removing its machinery or
proceedings taken under this section with or without an ad interim injunction
liability of the industrial concern to the Corporation together with the costs of the
realise 2[ in its estimation] an amount equivalent in value to the outstanding
sub- section (1) 1[ the Court] shall pass an ad interim order attaching the security
or so much of the property of the industrial concern as would on being sold
illWhen the application is for the reliefs mentioned in sub- clauses (a) and (c) of
made and such other particulars as may be prescribed.
liability of the industrial concern to the Corporation, the ground on which it is
.(2l An application under sub- section (1) shall state the nature and extent of the
Subs. by Act 74 of 1972, s. 17, for certain words.
the premises of the industrial concern without the permission of the Board.
original words. 4. Ins. by Act 74 of 1972, s. 17. 5. Ins. by Act 28 of 1955, s. 20. 6.
c__/
1. Subs. by Act 78 of 1952, s. 18, for certain original words. 2. The words" in the
opinion of the Board' omitted by s. 18, ibid. 3. Subs. by s. 19, ibid., for certain
into effect as far as may be practicable in the manner provided in the Code of
.(1Ql An order of attachment or sale of property under this section shall be carried
directs], until the appeal is disposed of.
empowered to hear appeals from the decisions of the said Court otherwise
an appeal may be preferred, or if an appeal is preferred, 3[ unless the Court
effect to until the expiry of the period fixed under sub- section (11) within which
order releasing any property from attachment, such order shall not be given
unless the Corporation intimates to 1[ the Court] that it will not appeal against any
costs of the proceedings in such manner as 2[ it] thinks fit: Provided further that
necessary to protect the interests of the Corporation, and may apportion the
under clause (c), 1[ the Court] may make such further orders as 2[ it] thinks
rejecting the claim made in this behalf: Provided that when making any orde-
fru transferring the management of the industrial concern to the Corporation of
@ confirming or dissolving the injunction, or
necessary in the interest of the Corporation, or
.{.Q} releasing the property from attachment, if 2[ it] is satisfied that it is not
attachment and directing the sale of the remainder of the attached property, or
.(Ql varying the order of attachment so as to release a portion of the property from
property, or
.{g} confirming the order of attachment and directing the sale of the attached
order-
lID On an investigation made under sub- section (8) 1[ the Court] shall pass an
shall as far as practicable apply to such proceedings.
@l If cause is shown 1[ the Court] shall proceed to investigate the claim of the
Corporation and the provision of the Code of Civil Procedure, 1908 (5 of 1908 ),
for" he". 4. Ins. by s. 3 and Sch. II, ibid., for certain words.
1974, s. 3 and Sch II, for" in his estimation". 3. Subs. by s. 3 and Sch. II, ibid.,
1. Subs. by Act 74 of 1972, s. 17, for" the District Judge". 2. Subs. by Act 56 of
of the industrial concern to the Corporation or confirm the injunction.
absolute and direct the sale of the attached property or transfer the management
the provisions contained in sub- section (15) or in respect of which time for
.(1Ql Every suit or other proceedings which are disposed of in accordance with
said Act.
proceeded with and disposed of as if this section had not been amended by the
(Amendment) Act, 1972 (74 of 1972 ), shall, on such commencement. be
High Court at the commencement of the Industrial Finance Corporation
under this Act pending before a District Judge or an Additional District Judge of a
ill} All proceedings (whether by way of suits or appeals or other proceedings)
appoint a receiver and to exercise all other powers incidental thereto.
to grant an ad interim injunction under this section shall also have the power to
UAl 3[ For the removal of doubts, it is hereby declared that any Court competent
other creditors of the industrial concern not conferred on it by any other law. 2[
made under sub- section (1) as giving to the Corporation any preference over the
in respect of the industrial concern have commenced before an application is
.(12l Nothing in this section shall be construed, where proceedings for liquidation
it thinks proper.
order and the appellate Court may] after hearing the parties pass such orders as
empowered to hear appeals from the decisions of the Court which passed the
.(11l Any party aggrieved by an order under sub- section (7) or sub- section (9)
may, within thirty days from the date of the order, 1[ appeal to the Court
the decree- holder.]
delivery of movable property in execution of a decree, as if the Corporation were
Procedure, 1908 (5 of 1908 ), for the possession of immovable property or the
as far as may be practicable, in the manner provided in the Code of Civil
High Court otherwise directs". 4. Ins. by Act 28 of 1955, s. 20.
1. Subs. by Act 74 of 1972, s. 17, for" the District Judge". 2. Subs. by Act 56 of
1974 s. 3 and Sch. II, for" he". 3. Subs. by Act 74 of 1972, s. 7 for unless the
concern to the Corporation shall be carried into effect,
(10Al 4[ An order under this section transferring the management of an industrial
execution of a decree, as if the Corporation were the decree- holder.
_./
Civil Procedure, 1908 (5 of 1908 ), for the attachment of sale of property in~'
, f_.
notified order shall be deemed to have terminated;
Director thereof holding office as such immediately before the issue of the
.(Q). any contract of management between the industrial concern and 5[ any
concern, shall be deemed to have vacated their offices as such;
exercise powers of superintendence, direction and control of the industria!
office as Directors of the industrial concern or any other offices entitling them to
@l 4[ all persons holding, immediately before the issue of the notified order.
order under section 30A,-
308. Effect of notified order appointing Directors. On the issue of a notified
terms and conditions as the Corporation may think fit.
appoint any individual 2[ to be the Manager] of the industrial concern on such
@ The power to appoint Directors under this section includes the power to
by the Corporation under this section].
retirement by rotation or removal from office shall apply to any D'rector appointee
of any share qualification, age limit, restrictions on the number or directorships.
concern in so far as it makes, in relation to a director any provision for the holding
1956 (1 of 1956 ), or in any such law or instrument relating to the industria!
Administrator of that industrial concern"] 3[ and nothing in the Companies Act
persons as it thinks fit to be the 2[ Directors, or, as the case may be, the
illWhen the management of an industrial concern is taken over the Corporation.
the Corporation may, by order notified in the Official Gazette, appoint 3S many
when management is taken over.
30A. 1[ Power of Corporation to appoint Directors of an industrial concern
s. 17, ibid.
the said Act.]
1. Subs. by Act 74 of 1972, s. 17, for" appeal to the High Court, and upon such
appeal, the High Court may". 2. Sub- section (13) omitted by s. 17, ibid. 3. Ins. by
commencement, be appealed against as if this section had not been amended by
Corporation (Amendment) Act, 1972 (74 of 1972 ), may, on such
r-- ".. r \...-------;~-+_/
appeal has not expired at the commencement of the Industrial Finance
industrial concern;]
association or, as the case may be, the memorandum or other instrument of the
powers are derived from the said Act or law or the memorandum or articles of
appointed under section 30A, shall alone be entitled to exercise all the powers of
the Directors (by whatever name called) of the industrial concern, whether such
operative societies, and such Directors or, as the case may be. the Administrator
1956 (1 of 1956 ) or under anylaw for the time being in force relating to co-
Directors of the industrial concern duly constituted under the Companies Act.
!ru 1[ the Directors appointed under section 30A shall, for all purposes, be the
the case may be, Administrator] as from the date of the notified order:
industrial concern shall be deemed to be in the custody of the 1[ Directors or. as
1. Subs. 30A to 30E ins. by Act 78 of 1952, s. 20. 2. Subs. by Act 50 of 1986, s.
15 (w. e. f. 2.2.1987).3. Ins. by Act 43 of 1957, s. 11.4. Subs. by Act 50 of
1986 s. 15 (w. e. f. 2. 2. 1987).5. Omitted by s. 16, ibid. (w. e. f. 2- 2- 1987 ).
the
industrial concern is, or appears to be, entitled, and all the property and effects of
or under their control all the property, effects and actionable claims to which the
section 30A shall take such steps as may be necessary to take into their custody
@ the 4[ Directors or, as the case may be, Administrator] appointed under
of the Corporation;]
no such Manager shall be removed from office except with the previous consent
shall, subject to the other provisions contained in this Act, apply accordingly; but
articles of association or, as the case may be, memorandum or other instrument
concern, and the provisions of the said Act or law, and of the memorandum and
operative societies and the memorandum or other instrument of the industrial
or, as the case may be, of any law for the time being in force relating to co-
1956 ), and the memorandum and articles of association of the industrial concern
been appointed in pursuance of the provisions of the Companies Act, 1956 (1 of
r-r--~-.::> _./.(Ql4[ the Manager, if any, appointed under section 30A, shall be deemed to have
appointed under section 30A shall take such steps as may be necessary for the
purpose of efficiently managing the business of the industrial concern and shall
exercise such powers and have such duties as may be prescribed.
illWithout prejudice to the generality of the powers vested in them under sub
section (1), the 2[ Directors or Administrator] appointed under section 30A may,
with the previous approval of the Corporation, make an application to a Court for
the purpose of cancelling or varying any contract of agreement entered into. at
any time before the issue of the notified order under section 30A between the
industrial concern and any other person and the Court may, if satisfied after due
inquiry that such contract or agreement had been entered into in bad faith and is
detrimental to the interests of the industrial concern, make an order cancelling or
varying (either unconditionally or subject to such conditions as it may think frt to
impose) that contract or agreement and the contract or agreement shall have
effect accordingly.
300. No right to compensation for termination contract of managing
agents.
ill Notwithstanding anything contained in any law for the time being in force.
3[ no Managing Director or any other Director or Manager or holder of any office
having the powers of superintendence, direction and control of an industrial
concern] shall be entitled to any compensation for the loss of office or for the
premature termination under this Act of any contract of management entered into
by him with such concern.
ill Nothing contained in sub- section (1) shall affect the right of any such
3[ Managing Director or any other Director or Manager or holder of office referred
to in that sub- section] to recover from the industrial concern moneys recoverable
otherwise than by way of such compensation.
1. Subs. by Act 50 of 1986, s. 16 (w. e. f. 2. 2. 1987 ). 2. Subs. by s. 17. ibid. (VI
e. f. 2. 2. 1987 ). 3. Subs. by s. 18, ibid. (w. e. f 2. 2. 1987 ).
30E. Application of Act 1 of 1956 .
30e. Powers and duties of Directors.
illSubject to the control of the Corporation, the 2[ Directors or Administrator]
1. Subs. by Act 43 of 1957, s. 12, for" Indian Companies Act, 1913 ".
32. Disposal of profits.
illThe Corporation shall establish a reserve fund.
@ After making provision for bad and doubtful debts, depreciation of assets and
all other matters which are usually provided for by bankers, the Corporation may
out of its net annual profits declare a dividend: Provided that for so long as the
reserve fund is less than the paid up share capital of the Corporation and until
there has been repaid to the Central Government such sums, if any, as that
Government may have paid under the guarantee given in pursuance of section 5
or under any guarantee given in pursuance of sub- section ::2) of
Act, 1891 (18 of 1891 ).
31. Act 18 of 1891 to apply to the books of the Corporation. The Corporation
shall be deemed to be a bank for the purposes of the Banker's Books Evidence
shall continue to apply to such concern in the same manner as it applied thereto
before the issue of the notified order under section 30A.]
Official Gazette, specify in this behalf, the 1[ Companies Act, 1956 (1 of 1956 )],
and limitations, if any, as the Central Government may, by notification i~ the
provisions contained in this Act and subject to such other exceptions, restrictions
.cru. it shall not be lawful for the shareholders of such concern or any other person
to nominate or appoint any person to be a Director of the concern;
.(Ql no resolution passed at any meeting of the shareholders of such concern
shall be given effect to unless approved by the Corporation;
~ no proceeding for the winding up of such concern or for the appointment of a
receiver in respect thereof shall lie in any Court, except with the consent of the
Corporation.
@ Subject to the provisions contained in sub- section (1) and to the other
or articles of association of such concern,-
illWhere the management of an industrial concern, being a company as defined
in the 1[ Companies Act, 1956 (1 of 1956 )], is taken over by the Corporation,
then, notwithstanding anything contained in the said Act or in the memorandum
'-)
1. Ins. by Act 78 of 1952, s. 21. 2. Second proviso omitted by Act 74 of 1972, s.
18.3. Subs. by Act 18 of 1964, s. 38 and Sch. II, for s. 32A (w. e. f. 1- 8- 1964 ).
ins. by Act 78 of 1952, s. 22.4. Ins. by Act 74 of 1972, s. 19.
Corporation, may promote the development of industries;
economic surveys and such other purposes which, in the opinion of the
illThe benevolent reserve fund shall be used by the Corporation-
!ru for meeting the cost of feasibility studies, project reports, market and techno-
.(Q1 income accruing or arising to the fund by way of interest or otherwise.
.(Ql income or profits from investments made from the fund:
grants, donations or benefactions from Government or any other source;
.(Ql all amounts received for the purposes of the fund by way of loans, gifts,
fund;
!ru any part of the annual profrt which may, from time to time. be allocated to the
m To the benevolent reserve fund shall be credited-
reserve fund.
illThe Corporation shall establish a special fund, to be called the benevolent
32B. 4[ Benevolent reserve fund.
shall have claims to the said fund.]
illThe Central Government, the Reserve Bank and the Development Bank only
fund under sub- section (1) and this sub- section exceeds one crore of rupees.
it, be also credited to the said fund until the aggregate of the sums credited to the
m All dividends accruing to the Development Bank shall, instead of being paid to
special reserve fund.
completed accounting period, whether declared or not, shall be credited to a
Central Government under sub- section (1) of section 4A in respect of any
Government and the Reserve Bank immediately before the date appointed by the
illAll dividends accruing on the shares of the Corporation held by the Central
32A. 3[ Special reserve fund.
exceed the rate guaranteed by the Central Government under section 5. 2[
C-.(i_./ ,_/
section 21 1[ or sub- section (2) of section 27]. the rate of such dividend shall not
I )
1. Subs. by Act 78 of 1952, s. 23, for" two". 2. Subs. by Act 2 of 1982, s. 15 (w. e.
f. 12.3. 1982 ).3. Subs. by s. 24, ibid., for sub- section (1). 4. Subs. by Act 43 of
prescribed manner by
226 of the Companies Act, 1956 (1 of 1956 )], one of whom shall be appointed by
5[ the Development Bank] and 6[ the other auditor or auditors] elected in the
duly qualified to act as auditors of companies under sub- section (1) of 4{ section
ill]The affairs of the Corporation shall be audited by not less than two auditors
34. Audit 3[
sheet and accounts.
discuss the annual accounts, the report of the Board on the working of the
Corporation throughout the year and the auditors' report on the annual balance-
@ The shareholders present at the annual general meeting shall be entitled to
Board at any other time.
of the Corporation are closed; and a general meeting may be convened by the
Corporation within 1[ 2[ four months] from the date on which the annual accounts
shall be held annually at a place in India where there is an office of the
illA general meeting (hereinafter referred to as the annual general meeting)
a~entioned purposes.]
V{3.General meetings.
them especially in less industrially developed regions;
.{Ql for rendering any assistance that may be ancillary or incidental to the
!ill by providing technical and managerial assistance to projects promoted by
of loans or advances sanctioned to them;
{Ql for assisting projects promoted by technologists and new entrepreneurs-
illby subsidising the normal lending rate of interest of the Corporation in respect
foundations;
illfor undertaking and promoting research;
!ill for training in India or abroad of personnel of financial institutions; and
(iii) for creating chairs in universities, academic institutions and research
management-
._./
.(Ql in the field of development banking and in financial and industrial
.........--._ ~,
_-J.
1964).4. Sub- section (5) omitted by s. 38 and Sch. II. ibid. (w. e. f. 1- 8- 1964 ).
and Sch. II, for" the Comptroller and Auditor General of India" (w. e. f. 1- 8-
f. 1- 8- 1964).2. Ins. by Act 78 of 1952, s. 24. 3. Subs. by Act 18 of 1964, s. 38
1. Subs. by Act 18 of 1964, s. 38 and Sch. II, for" the Central Government" (w. e
so requires.
any other examination be made by the auditors if in its opinion the public interest
of the audit or direct that a different procedure in audit be adopted or direct that
the affairs of the Corporation, and may at any time enlarge or extend the scope
shareholders and creditors or upon the sufficiency of their procedure in auditing
upon the adequacy of measures taken by the Corporation for the protection of its
Bank]] at any time issue directions to the auditors requiring them to report to it
!.4l The Central Government may 2[ in consultation with 3[ the Development
whether it is satisfactory.
any explanation or information from the Board whether it has been given and
view of the state of the affairs of the Corporation, and in case they have called for
necessary particulars and properly drawn up so as to exhibit a true and correct
their opinion the balance- sheet is a full and fair balance- sheet containing all
balance- sheet and accounts, and in every such report they shall state whether h
ill The auditors shall make a report to the shareholders upon the annual
in relation to such accounts examine any Director or officer of the Corporation.
access to the books, accounts and other documents of the Corporation, and may
of all books kept by the Corporation, and shall at all reasonable times have
and vouchers relating thereto; and every auditor shall have a list delivered to him
Corporation. ]
m Every auditor shall be supplied with a copy of the annual balance- sheet of
the Corporation, and it shall be his duty to examine it together with the accounts
1[ the Development Bank] may fix shall be paid to the auditors by the
the parties mentioned in sub- section (3) of section 4, and such remunerations as
Act 43 of 1957, s. 13, for" the other".
18 of 1964, s. 38 and Sch. II, for certain words (w. e. f. 1- 8- 1964 ).6. Subs. by
1957, s. 13, for" section 144 of the Indian Companies Act, 1913 ".5. Subs. by Act
report of the working of the Corporation during the year, and copies of the said
the close of that year together with a profit and loss account for the year anc a
........,....."c~i~a,1year a statement in the prescribed form of its assets and liabilities as at
ill The Corporation shall furnish to the Central Government. 6[ the Reserve
Bank and the Development Bank] within 7[ 2[ five months] of the close of the
4[ Development Bank] or the Reserve Bank may require 5[ a statement showing
the classification] of its loans and investments and of loans guaranteed by it anc
underwriting agreements entered into by it.
Bank} and to the Reserve Bank at least once in every year or as frequently as the
.(2} The Corporation shall furnish in the prescribed form to the 4[ Development
relates.
Development Bank] 3[ within ten days from the date to which the statement
1881 ), as at the close of business on the preceding wori<ing day, tor :he
that day is a public holiday under the Negotiable Instruments Act 188'j (26 of
and liabilities as at the close of business on the last Friday of each month, cr [f
illThe Corporation shall furnish a statement in the prescribed form of its assets
35. Returns.
purpose of auditing the affairs of the Corporation."}
taken into consideration by the auditors appointed under section 34 for the
any office or agency of the Corporation and the report of such auditors shall be
auditors appointed under section 34, appoint local auditors to audit the affairs of
34A. 2[ Appointment of local auditors. The Board may, in consultation with the
India.]
ill Every audit report shall be forwarded to the Central Government and ~ lGovernment shall cause the same to be laid before both Houses of parliamen~
shall be payable by the Corporation to the Comptroller and Auditor- General of
any expenditure incurred by him in connection with such examination and report
General of India to examine and report upon the accounts of the Corporation and
@l1[ Without prejudice to anything contained in the preceding sub- sections, the
Central Government may, at any time, appoint the Comptroller and Auditor-
writing, frame a scheme providing for all matters for which provision is necessary.
Corporation to the Development Bank, the Central Government shall, by order in
ill For the purpose of giving effect to the transfer of the undertaking 07 the
shall stand transferred to and vest in the Development Bank.
provisions of this Act), interests, privileges and obligations of whatever nature.
loans and advances granted by the Corporation in accordance wrth the
business, property, assets and liabilities, rights (including the right to recover
notification in the Official Gazette that with effect from such date as may be
specified in the notification the entire undertaking of the Corporation. including ali
Development Bank under sub- section (2), the Central Government may direct by
rn After the transfer of the shares by the Central Government to the
such acquisition.
bank paying an amount equal to the amount paid by the Central Government for
Central Government shall transfer the shares to the Development Bank on that
@ 3[ After the acquisition of the shares as provided by sub- section (1). the
acquisition, subject to a maximum of ten per cent.
per cent. of the paid- up value for every year from the date of issue to the date of
paid- up value of the shares together with a premium calculated at the rate of one
shareholders shall be paid for the shares so acquired an amount equal to :he
shares held by shareholders 2[ other than the Development Bank] the
ill] In the event of the Central Government at any time deciding to acquire the
36. Acquisition of shares by the Central Government. 1[
Reserve Bank" (w. e. f. 1- 8- 1964).7. Subs. by Act 43 of 1957, s. 14, for" three
months". 8. Subs. by the A. O. 1950, for" the Central Leqislature".
be laid before 8[ Parliament).
1. Subs. by Act 18 of 1964, s. 38 and Sch. II, for sub- secticn (6) (w. e. f. 1- 8-
1964 ). 2. Ins. by Act 2 of 1982, s. 16 (w. e. f. 12. 3. 1982 ). 3. Subs. by s. 17,
ibid. (w. e. f. 12. 3. 1982 ). 4. Subs. by Act 18 of 1964, s. 38 and Sch. 11, for"
Central Government" (w. e. f. 1- 8- 1964 ). 5. Subs. by Act 78 of 1952, s 25, for"
a classification". 6. Subs. by Act 18 of 1964, s. 38 and Sch. II, for" and :he
statement, account and report shall be published in the Official Gazette and s.1all
intended to be done by him as such Director. 3[ or Administrator]].
under section 25 or section 30A for anything which is in good faith done or
and 30A. No suit, prosecution or other legal proceeding shall lie against any
Director] or Admistrator) 3[ of an industrial concern appointed by the Corporation
38A. 2[ Protection of action taken by Directors appointed under sections 25
wrongful act of any person under obligation to the Corporation, or by anything
done in good faith in the execution of the duties of his office or in relation thereto.
property or security acquired or taken on behalf of the Corporation. or by the
the Corporation by the insufficiency of deficiency of value of. or title to, any
1[ or other employee] of the Corporation or for any loss or expense resulting to
m. A Director shall not be responsible for any other Director or for any officer
are caused by his own wilful act or default.
expenses incurred by him in or about the discharge of his duties. except such as
illEvery Director, shall be indemnified by the Corporation against all losses and
38. Indemnity of Directors.
words (w. e. f. 1- 8- 1964).3. Ins. by s. 38 and Sch. II, ibid. (w. e. f. 1- 8- 1964 ).
and Sch, II (w. e. f. 1- 8- 1964).2. Subs. by s. 38 and Sch II. ibid., for certain
1. S. 36 renumbered as sub- section (1) of that section by Act 18 of 1964. s. 38
such manner as it may direct.
shall not be placed in liquidation save by order of the Central Government and i.1
companies or corporations shall apply to the Corporation, and the Corporation
37. Liquidation of Corporation. No provision of law relating to the winding up of
such Act or other law.]
contained in this Act or any other law or any instrument having force by virtue of
@ The provisions of this section shall have effect notwithstanding anythirg
contract or other instrument.
anything to the contrary contained in any law for the time being in force or in any
and employees and the Development Bank and shall have effect notwithstanding
,1'\ .. ~
I ' ', ..~C l/.'~--
and the scheme so framed shall be binding upon the Corporation, its creditors
·_}
Transfer of Undertakings) Act, 1970 (5 of 1970 ) or under section 3 of the
Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 cf
1980 ), any other scheduled bank, any State cooperative bank or the
Development Bank, such credit information or other information as it may
consider useful for the purpose, in such manner and at such time as it may think
fit. Explanation.- For the purpose of this sub- section, the expression" credit
information" shall have the same meaning as in clause (c) of section 45A of the
Reserve Bank of India Act, 1934 (2 of 1934 ), subject to the modification that the
banking company referred to therein shall mean a bank referred to in clause (b)
of this subsection.] [ (3)] 5[ Every Director, 6[ member of any Advisory or other
Committee,) auditor,[ local auditor,) 7[ officer 8[ or other employee] of the
Corporation shall, before entering upon his duties, make a declaration of fidelity
and secrecy in the form set out in the Schedule.
40. Provision relating to income- tax and supertrtax. For the purposes of the
Indian Income- tax Act, 1922 (11 of 1922 ), the Corporation shall be deemed tc
be a company within the meaning of that Act and shall be liable to income- tax
and super- tax accordingly on its income, profits and gains: Provided that any
sum paid by the Central Government under the guarantee given in pursuance of
.(g). the Central Government;
.(Ql the State Bank of India constituted under section 3 of the State Bank of India
Act, 1955 (23 of 1955 ), any subsidiary bank within the meaning of the State
Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959 ), any corresponding new
bank constituted under section 3 of the Banking Companies (Acquisition and
illThe Corporation shall not, except as otherwise required by this Act or any
other law for the time being in force, divulge any information relating to, or to the
affairs of its constituents except in circumstances in which it is, in accordance
with the law or practice and usage, customary among bankers, necessary or
appropriate for the Corporation to divulge such information.
.(2l The Corporation may, for the purpose of efficient discharge of its functions
under this Act, collect from, or furnish to-
39. Declaration of fidelity and secrecy. 4[
)
Corporation for any accommodation granted by it under this Act wilfully makes
the Corporation where by security is given or is purported to be given to the
illWhoever in any bill of lading, warehouse receipt or other instrument given to
41. Offences.
section 4A.]
provisions not inconsistent with the purposes of this Act as appear to it necessary
or expedient for removing the difficulty.
m An order under sub- section (1) may be made so as to have retrospective
effect from a date not earlier than the date appointed under sub- section (1) of
Government may, by order published in the Official Gazette, make such
ill If any difficulty arises in giving effect to the provisions of this Act, the Central
40B. 3[ Removal of difficulties.
deem necessary.]
specified in the order, such of its powers and duties under this Act as it may
Corporation, subject to such conditions and limitations, if any, as may be
delegate to the Chairman[. Managing Director] 2[ or any officer of the
40A. 1[ Delegation of powers. The Board may, by general or special order.
income- tax free within the meaning of section 8 of the said Act.
shall be deemed to be his income from" interest on securities", declared to be
as has been paid out of any such sum advanced by the Central Government.
Provided further that in the case of any shareholder, such portion of a dividend
servant". 9. Ins. by s. 28, ibid.
1. SUbs.by Act 78 of 1952, s. 26, for" or servant". 2. Ins. by Act 43 of 1957, s. 15.
3. Ins. by Act 50 of 1986, s. 19 (w. e. f. 2. 2. 1987 ). 4. Ins. by Act 48 of 1983, s.
5.5. Re- numbered by s. 5, ibid. 6. Ins. by Act 74 of 1972, s. 20. 7. Ins. by Act 2
of 1982, s. 18 (w. e. f. 12.3.1982).8. Subs. by Act 78 of 1952, s. 27, for" or
Corporation out of such sum shall not be treated as expenditure incurred by it:
on foreign currency borrowed under sub- section (1) of section 27] paid by the
profit and gains of the Corporation, and any interest on debentures or bonds 9[ or
section 21 9[ or sub- section (2) of section 27] shall not be treated as the income,
sub- section 5 or under any guarantee given in pursuance of sub- section (2) of
."
11'\ .---!~ '---..,
I' ---'-
)
of thirty days which may be comprised in one session or 2( two or more
successive sessions, and if, before the expiry of the session immediately
is made, before each House of Parliament while it is in session for a total period
m 3[ Every rule made under this section shall be laid, as soon as may be after it
the rules shall prevail.
is any inconsistency between the rules and the regulations made under this Act
provisions of this Act, to give effect to the provisions of this Act. and where there
and by notification in the Official Gazette, make rules not inconsistent with the
ill ]The Central Government may, in consultation with the Development Bank
42. Power of Central Government to make rules. 1[
concern.]
derogation of, any other law for the time being applicable to an industria!
save as aforesaid the provisions of this Act shall be in addition to. and in
in any other instrument having effect by virtue of any law other than this Act. but
force or in the memorandum or articles of association of an industrial concern or
1. Ins. by Act 28 of 1955, s. 21. 2. Ins. by Act 50 of 1986, s. 20 (w. e. f. 2. 2. 1987
). 3. Ins. by Act 18 of 1964, s. 38 and Sch. II (w. e. f. 1- 8- 1964 ). 4. Ins. by Act
78 of 1952, s. 29.
inconsistent therewith contained in any other law for the time being in
or orders made thereunder shall have effect notwithstanding anything
41A. 4[ Effect of Act on other laws. The provisions of this Act and of any rules
authorized by the Board in this behalf.
otherwise than on a complaint in writing signed by an officer of the Corporation
m No Court shall take cognizance of any offence punishable under this Act
extend to one thousand rupees or with both.
imprisonment for a term which may extend to six months or with fine which may
the Corporation in any prospectus or advertisement shall be punishable with
m Whoever without the consent in writing of the Corporation uses the name of
with fine which may extend to two thousand rupees or with both.
12 (--..any false statement, or knowingly permits any false statement to be made, shall
be punishable with imprisonment for a term which may extend to two years or
,~ II
"
_)
Managing Director] or to officers of the Corporation;]
(ee) 2[ the delegation of powers and functions of the Board to the Chairman 3( ,
and the conduct of business thereat;
iru the calling of meetings of the 1[ Board], fees for attending meetings thereof
followed thereat and the manner in which voting rights may be exercised;
@ the manner in which general meetings shall be convened, the procedure to be
Corporation may be held and transferred, and generally all matters relating to the
rights and duties of shareholders;
.(.Q} the manner in which and the conditions subject to which the shares of the
Ins. by Act 50 of 1986, s. 21 (w. e. f. 2. 2. 1987 ). 6. Ins. by Act 78 of 1952, s. 30.
2. Subs. by Act 52 of 1975, s. 23, for certain words (w. e. f. 16- 2- 1976 ). 3. Ins.
by Act 66 of 1960, s. 8. 4. Subs. by Act 74 of 1972, s. 21, for certain words. 5.
1. S. 42 re- numbered as sub- section (1) of that section by Act 66 of 1960. s. 8.
shares of the Corporation shall be made;
.(Ql the manner in which and the conditions subject to which the first allotment cf
decision of doubts or disputes regarding the validity of elections;
.c.ru the holding and conduct of elections under this Act, including the final
such regulations may provide for-
.{2} In particular and without prejudice to the generality of the foregoing power,
provisions of this Act.
provision is necessary or expedient for the purpose of giving effect to the
this Act 6[ and the rules made thereunder] to provide for all matters for which
by notification in the official Gazette] 5[ make regulations not inconsistent with
illThe Board may, 4[ with the previous approval of the Development Bank],[ and
43. Power of Board to make regulations.
under that rule.]
annulment shall be without prejudice to the validity of anything previously done
no effect, as the case may be; so, however, that any such modification or
be made, the rule shall thereafter have effect only in such modified from or be of
making any modification in the rule or both Houses agree that the rule should not
I <","-'t f\')
following the session or the successive sessions aforesaid] both Houses agree in
period of thirty days which may be comprised in one session or in two or more
after it is made, before each House of Parliament, while it is in session. for a total
rn 6[ Every regulation made under this section shall be laid, as soon as may be
.{Ql generally, the efficient conduct of the affairs of the Corporation. 5[
.(no). 4[ the election of an auditor under sub- section (1) of section 34;]
business thereat]; 3[
purposes of this Act, 2[ fees for attending meetings thereof and the conduct of
.(ill appointment of 1[ advisory] committees for technical and other advice for
Ins. by Act 28 of 1955, s. 22. 3. Ins. by Act 50 of 1986, s. 21 (w. e. f. 2. 2. 1987 ).
4. Subs. by Act 2 of 1982, s. 19 (w. e. f. 12.3.1982 ).5. Subs. by Act 28 of 1955.
s. 22, for the former cl, (k). 6. Ins. by Act 45 of 1949, s. 3 7. Subs. by Act 78 of
1952, s. 30, for the former cl. (m).
3[ or Administrator] under section 30C;]
1. SUbs. by Act 74 of 1972, s. 21, for" Board and of the Central Committee" 2.
of its agreement with the Corporation and the powers and duties of Directors
.(m). 7[ the taking over of the management of any industrial concem on a breach
concern;
ill the disclosure of interest, direct or indirect, of a Director in any industrial
employees of the Corporation;]
(kk) 6[ the establishment and maintenance of provident cr other benefit funds for
officers and other employees and of advisers and agents of the Corporation;]
.Qsl 5[ the duties and conduct, salaries, allowances and conditions of servce of
ill the forms of returns and statements required under this Act;
foreign currency from foreign lenders;
ill the manner and conditions subject to which the Corporation may borrow in
.(bl 4[ the conditions and limitations subject to which the Corporation may enter
into business under the proviso to clause (iii) of sub- section (3) of section 25;]
advances;
the Corporation;
19l the conditions which the Corporation may impose in granting loans or
('. (~'. \
'i'.' ._______\._.-' ._.....
ill. the manner and terms of issue and redemption of bonds and debentures by
anything previously done under that regulation.]
such modification or annulment shall be without prejudice to the validity of
such modified form or be of no effect, as the case may be; so, however, that any
regulation should not be made, the regulation shall thereafter have effect only in
making any modification in the regulation or both Houses agree that the
following the session or the successive sessions aforesaid, both Houses agree in
/' ,""7bL-~successive sessions, and if, before the expiry of the session immediately
Corporation (Transfer of Undertaking and Repeal) Ordinance. 1993 was
passed during the winter session of Parliament. As such the Industrial Finance
was introduced in the Lok Sabha on 30th November, 1992. The Bill could not be
Industrial Finance Corporation (Transfer of Undertaking and Repeal) Bill, 1992
Ordinance, 1992 was promulgated on 1st October, 1992. Subsequently, the
system, the Industrial Finance Corporation (Transfer of Undertaking and Repeal)
consequent ability of IFCI to respond to the needs of the fast changing financial
2. To deal with these problems and in particular to ensure greater flexibilir/ and
considered anomalous as the two institutions are competitors.
Industrial Development Bank of India, in the functioning of the IFC/. This is
also provides for very dominant role to its major shareholder namely. the
thereby prevents it from raising resources, on competitive terms. Further, the Act
accessability to the market, only when backed by a Government guarantee and
However, the Industrial Finance Corporation Act, 1948 forbids IFCl's
Finance Corporation of India (lFCI) to raise resources largely from the market.
several months in the financial sector have made it obligatory for the Industrial
and the Reserve Bank of India over the years as also the changes in the past
Continued decline in the availability of concessional funds from the Government
Statement of Object
as follows:-
BE it enacted by Parliament in the Forty-forth Year of the Republic of India
repeal the Industrial Finance Corporation Act, 1948.
matters connected therewith Ordinance incidental thereto and also to
and registered as 1981 company under in the companies Act, 1956, and for
Industrial Finance Corporation of India to and in the Company to be formed
An Act to provide for the transfer and vesting of the undertaking of the
(Transfer of Undertaking and Repeal) Act, 1993
Industrial Finance Corporation
(c) "Corporation" means the Industrial Finance Corporation of India established
under sub-section(1) of section 3 of the Industrial Finance Corporation Acr..1948.
(b) "Company" means the Industrial Finance Corporation of India Limited to be
formed and registered under the Companies Act, 1956;
(a)"appointed day" means such date as the Central Government may, by
notification in the Official Gazette, appoint under section 3;
2 . Definitions.- In this Act, unless the context otherwise requires,-
(2) It shall be deemed to have come into force on the 1st day of October, 1992
1 . Short title and commencement- (1) This Act may be called the lndust-ial
Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993.
Undertaking and Repeal) Ordinance, 1993.
3. The Bill seeks to replace the Industrial Finance Corporation (Transfer of
similar financial institutions.
Corporation in future, and create a more levelled playing field across broadly
capital market for resources, facilitate expansion of the equity base of the
enable it to reshape its business strategies, provide greater autonomy, enter the
Finance Corporation Act, 1948. Conversion of IFCI into a Company wouta also
appointed day to be notified by the Government and also to repeal the Industrial
well as all the assets and liabilities and the staff of IFC.!will be transferred on the
Corporation of India Limited to which the entire business and functions of IFel as
Company under the Companies Act, 1956 to be known as the Industrial Finance
Ordinance. The latter Ordinance provides for the establishment of a new
promulgated by the President on 2nd January, 1993 to replace the said
and working arrangements subsisting immediately before the appointed day and
(3) All contracts, deeds, bonds, guarantees, powers of attorney.other instruments
subsisting of the Corporation in relation to its undertaking.
liabilities and obligations of whatever kind within Ordinance without India then
documents relating thereto and shall also be deemed to include all borrow ings
within Ordinance without India, all books of accounts, registers, records and
possession Ordinance power of the Corporation in relation to its undertaking.
such properties were immediately before the appointed day in the ownership.
tenacious, leases and book debts and all other rights and interests arising out of
concerns, loans, advances and guarantees given to industrial concerns,
investments, shares, bonds, debentures. security, management of any industrial
special reserve fund, benevolent reserve fund ,any other fund, stocks.
deposits.foreign currencies, disclosed and undisclosed reserves. reserve fund.
wheresoever situate including lands, buildings, vehicles, cash balances,
Ordinance reservation, present Ordinance contingent of whatever nature ard
immovable, real and personal, corporeal and incorporeal, in possession
rights, powers, authorities and privileges and 1981" properties, movable and
the Company under section 3 shall be deemed to include all business, assets.
(2) The undertaking of the Corporation which is transferred to and which vests in
the Company to the extent of the face of the shares held by such shareholder.
deemed to be registered on and form the appointed day as 1981 shareholder of
shareholder of the Corporation immediately before the appointed day shall oe
4. General effect of vesting of undertaking in the Company.- (1) Every
Corporation.
shall be transferred to, and vest in, the Company, the undertaking of the
the central Government may, by notification in the Official Gazette, appoint there
---,r\ (!~3 . Undertaken of the Corporation to vest in the Company.- On such date as
to the Company.
exemption, assessment Ordinance benefit shall continue to have effect in relation
available to the Corporation under the Income-tax Act, 1961. (43 of 1961) such
Ordinance other allowance Ordinance loss has been extended Ordinance is
forward of any unabsorbed depreciation Ordinance investment allowance
been granted of made Ordinance any benefit by way of set off Ordinance carry
any exemption from, Ordinance any assessment with respect to , any tax has
6 . Tax exemption Ordinance benefit to continue to have effect.- (1) Where
be deemed to have been granted to the Company.
affairs and business of the Corporation under any law for the being in force shall
benefits, privileges and exceptions granted to the Corporation in connection with
With effect from the appointee day, all fiscal and other concessions, licenses.
5 . Concession ,etc., to be deemed to have been granted to the Company.-
cease to be enforceable by Ordinance against the Corporation.
Ordinance against the Corporation if this Act had not been enacted and shall
Corporation has vested by virtue of this Act as it might have been enforced by
enforced by Ordinance against the Company in which the undertaking of the
relation to its undertaking may, as from the appointed day, be continued and
immediately before the appointed day by Ordinance against ht e Corporation in
(4) Any proceeding Ordinance cause of action pending Ordinance existing
party thereto.
Corporation, the Company had been named therein Ordinance had been 1981
by virtue of this Act and enforceable as fully and effectual as if instated of the
in favour of the Company in which the undertaking of the Corporation has vestee
against the Corporation and shall be of as full force and effect against Ordinance
--. ,-..,..... :., r-::;:;--, ;----
\
affecting the Corporation shall cease to have effect Ordinance to be enforceable
appointed day if such officer or other employee opts not to continue to be the
employee of the Company or until the expiry of period of a six months from the
shall continue to do so as an officer Ordinance, as the case may be . other
held under the Corporation if its undertaking had not vested in the Company and
retirement, voluntary retirement, gratuity and other benefits as he would have
welfare scheme, medical benefit scheme, insurance, provident fund. other funds.
and with the same rights and privileges as to leave, leave fare concession,
remuneration, upon the same terms and conditions, with the same obligations
shall hold his office Ordinance service therein by the same tenure. at the same
officer Ordinance, as the case may be , other employee of the Company and
in the Company by virtue of this Act, become, as from the appointed day, an
other employee is employed in connection with the undertaking which has vested
immediately before the appointed day shall, in so far as such officer Ordinance
of Board, Chairman or managing Director) serving in the employment
Every officer Ordinance other employee of the Corporation (except 1981 Director
8. Provisions in respect of officers and employees of Corporation.- (1)
assistance shall continue to be operative in relation to the Company.
the Corporation with respect to any loan, lease finance Ordinance other
7 . Guarantee to be operative.- Any guarantee given for Ordinance in favour of
Income-tax Act, 1961 for the purposes of gains.
(3) The transfer and vesting of the undertaking Ordinance any part thereof in
terms of section 3 shall be construed as 1981 transfer within the meaning of the
to the Corporation were operative in relation to the Company.(43 of 1961)
at source under any provision of the Income-tax Act, 1961, Act made applicable
1-(t(2) Where any payment made by the Corporation is exempt from deduction cf tax
Corporation shall be entitled to any compensation against the Corporation
Chairman, Managing Director Ordinance any other person entitled to rna-rape
the whole Ordinance substantial part of the business and affairs of the
Ordinance in the regulations of the Corporation, no Director of the Board,
(6) Notwithstanding anything contained in this Act Ordinance in the Companies
Act, 1956 (1 of 1956) Ordinance in any other law for the time being in force
hitherto in the Corporation and any tax exemption granted to the provident fund,
or the gratuity fund would continue to be applied to the Company.
would continue to discharge their functions in the Company as was being done
and any other bodies created for the welfare of officers Ordinance employees
(5) The trusts of the provident fund Ordinance the gratuity fund of the Corporation
Ordinance privileges from the Company.
Ordinance privileges shall be entitled to receive the same benefits. rigrts
from the services of the Corporation and are entitled to any benefits, :ights
(4) The officers and other employees who have retired before the appoir.ted day
other authority.
force and no such calm shall be entertained by any court, tribunal Ordinance
compensation under this Act Ordinance under any other law for the time bein·~ n
Company shall not entitle such officer Ordinance other employee to any
(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of
1947) Ordinance in any other law for the time being in force, the transfer of the
services of any officer Ordinance other employee to of the Corporation of the
(2) Where an officer Ordinance other employee of the Corporation opts under
sub-section (1) not to be in employment Ordinance service of the Company, such
officer Ordinance other employee shall be deemed to have resigned
officer Ordinance other employee of the Company within such period.
taken under the corresponding provisions of this Act.
action taken under the said Ordinance. shall be deemed to have been done Ordinance
Undertaking and Repeal) Ordinance, 1993.{Ord.5 of 1993) anything done Ordinance an:
(2) Notwithstanding the repeal of the Industrial Finance Corporation (Transfer of
undertaking and Repeal) Ordinance, 1993 (Ord.5 of 1993) is hereby repealed.
12 . Repeal and saving.- (1) The Industrial Finance Corporation (Transfer of
(15 of 1948)t
the Industrial Finance Corporation Act, 1948
0epea' and saving of Act 15 of 1948.- (1) Ontheappointedday.the
Industrial Finance Corporation Act, 1948 shall stand repealed.
1949.(10 of 1949)
(2 of 1882) the Insurance Act, 1938 (4 of 1938,) and the Banking Regulation Act
deemed to be approved securities for the purpose of the Indian Trusts Act, 1882
being in force, the shares, bonds and debentures of the Company shall be
securities.- Notwithstanding anything contained in any other law for the time
10 . Shares, bonds and debentures to be deemed to be approved
1891.
be deemed to be bank fir the purposes of the Banker's Books Evidence Act,
9. Act 18 of 1891 to apply to the books of the Company.- The Company shall
termination of any management entered into by him with the Corporation.
Ordinance the Company for the loss of office Ordinance for the premature
I 1...---.
1-\ C'
New Delhi
IFCI Tower, Nehru Place
Executive Director, IFCI
Shri R.M. Mana
(Atul Kumar Rai)
Sd-
Yours sincerely.
With best regards,
Rs. 4,697 crore is under consideration of the Government.
the assistance as grant. The matter regarding conversion of balance assistance of
assistance to IFCI during 2003-04. A request has been received from IrCI :0 treat
schedule. A provision of Rs.l ,573 crore had been made by the Government for
Government have released Rs. 523 crore during 2002-03 to IFCI as per the
2. A copy of the schedule of payments by Government is at annex. The
current G-Sec rate on SLR bonds held by PSUs/Fls till its maturity.
Government would bear the difference between the existing coupon rate} and the
borrowings of the IFCI from ADB and KFW. It has also been decided that
be taken over by the Government. Government would also service the
guaranteed SLR bonds and retial borrowing of investors below Rs. 1 lakh would
Government that the liabilities of the IFCI in respect of the Government
regarding restructuring of IFCI's liabilities. It has been decided by the
Please refer your letter No.lFCIlRES/GOIl2002-03 dated July 3, 2003
Dear Shri Mana,
Dated: July 22, 2003D.O. No.2/16/2002-IFI
NEW DELHI-I 10 001
10, PARLIAMENT STREET
'JEEVAN DEEP'
(BANKING DIVISION)Tel: 23344052
DEPARTMENT OF ECONOMIC AFFAIRSDirector (EA&IFI)
MINISTRY OF FINANCE & COMPANY AFFAIRSAtul Kumar Rai
"True Copy"
. (RS.CR)2002~ ~~u,,-yIs: .1 ~~uo- ~UUI:>- 2007~ 12008- 12009- I 2010. 2011- Tc~al--03 07 08 09 10 1 1 '2 -R..... il IInv~stQrs
;. ,III IliltJdl 0 11,62 i 1'£... .'~."'Interest 185 . I ~j'::
• y-
Bonds I I
held' byOther' than
\•
PSSs/ Fis-Prlncioal 84 168 0 u 0 1';}::1 64 60 I 64 89 668-lnterest 80 62 50 ou .:IV "+~ ~u \ 2 3 15 S .!,'x~O8 andFW
IBorrowing is IGuarantee \d by I IGovernment I-Principai '<:0 I ,(.~ L~ ,(.~ L"!:j 29. 31 1 33 3-d 533 804-lnterest 11 10 IU ::1 l:I 0 8 \ 7 \ 7 6 a2~cBlrom
\ 1
Iank of IBaroda ,\ I-Princtoal 970 \ , 9r-tmet est H <+1 41 <+1 41 24 J ;_:::Difference I Ibf'tween ICoaapon 0an 6.5 Yo I 1for SLR 118 101 96 96 96 81 63 45 27 iG 733
,l I I I ;6~ ~ :".A7 ~~!!Total $23" j 1&1:1'- : '. 0': "V)l'" ; ...-,<".c : ~3{,'J Hji3 I --~./~'.' JI_._ •• ""'_W -
Supportfrom Government for IFCI as per Restructuring Package
recovery in relation to the targets set for the year FY 20.0.3-20.04:
(a) to expedite the plan of transfer of assets to ARC and to report
addition to the terms and conditions conveyed vide letter no. F. NO.6 (1)
190. IF- I dated 23.0.6.20.0.3,IF=CIis advised as follows :-
2. The terms and conditions of the Grant is enclosed herewith. In
during 20.0.3-20.0.4.
Corporation of India Limited, IFel Tower, 61 Nehru Place, New Delhi
I am directed to convey the sanction of the President of India to
the payment of Grant of Rupees 1573 crore ( Rupees Ofl¬ Thousand
Five Hundred and Seventy Three Crore only ) to the Industrial Finance
Sir,
Grant to the IFel Ltd. during the year 200.3-04Subject:
New Delhi
lndraprastha Estate
ERIS & Banking
AGCR Building
The Pay & Accounts Officer
To
New Delhi, the 23rd September, 20.0.3
Banking Division
Ministry of Finance
Government of India
F.No. 2(16) 12o.o.2-IF.1
Under Secretary to the Govt of India
(B. D. Berwal)
Sd/-
Yours faithfully.
174411FAl03dated 19.09.2003.
5. The sanction issues with the concurrence of IF Unit vide their U O.
2003- 04, this has been converted into Grant.
4. The expenditure is Non-Plan and in the 1st Supplementary for
Grants-in-aid02.01.31
Grants to Industria! Finance Corporation of02
Other Expenditure (Minor Head)800
Industrial Financial Institutions01
Other Outlays on Industries and Minerals2885
3 The amount is debitable to demand NO.33 Payment to Financial
Institutions, for the financial year 2003-04, under major head:
r-'b'-6(c) not to make fresh recruitment: and
(d) not to introduce performance linked scheme I ESOP
(b) to introduce VRS:
..
4..
sdl
(B. D. Berwal )
Under Secretary to the Govt of India
1.Cash Branch, Banking Division, with a spare copy with the request that
necessary bill may kindly be prepared and the amount remitted to the IFC;
through the AlC payee cheque only in the above address.
2. Desk Officer, IF Unit (DEA) , North Block, New Delhi with reference to U.O
No. refereed above.
3. Controller of Aid Accounts and Audit, DEA, 5th Floor, Janpath Bhawan, New
Delhi.
4. Department of Economic Affairs, Fund Bank - VI, Room No, 276 - G North
Block, New Delhi.
5. Controller of Accounts, Department of Economic Affairs, Ministry of Finance,
C/o Chief Controller of Accounts, 4th Floor, AGCW&M, I P. Estate I New Delhi.
6. Executive Director, IFCI Limited, IFel Tower, 61, Nehru Place, New Delhi -
110019.
7. Guard File - 3 copies
New Delhi, dated the 23rd September, 2003 .F.No. 2(16)/2002- IF.I
The amount is debitable to Demand No. 33payments to Financial Institutions in Demands fergrants to Ministry of Finance 2003-2004 underMajor Head-2885- Other Outlays on industries &
minerals01 Industrial Financial Institutions.800 Other Expenditure (Minor Head)02 Grants to Industrial Financial
Corporation of India Ltd.
02.01.31 Grants
"Non Plan-Central Non Plan"
Govt of India, Ministry of Finance, Department ofEconomic Affairs (Banking Division), New Delhi.The IFCI Limited.Rs 15730000000/- (Rupees One Thousand FiveHundred and Seventy Three Crore only)Sanction is valid upto 31st March. 2004.Financial Restructuring of IFCI Ltd.By Alc Payee cheque
8. Sub-head of loan to whichamount sanctioned is
debitable
7. Planl Non-Plan
4. Sanction Valid upto5. Purpose of the Grants6. Payable in cash or any
adjustment
2. Name of the Borrower3. Amount Sanctioned
1. Sanctioning Authority
Annexure to Sanction to F. No. 2(16) 12002 IF-1 Dated 23.09.2003
sd/(B.D. Berwal)
Under Secretary to the Govt of India.
(iv) Recovery from NPAs by means other thanthrough sale/transfer to ARC would be stepped upin line with the target for reduction in NPAs,(v) Reduction in the strength of personnel at the rateof 5% points per annum.(vi) Fresh sanctions and disbursals would berestricted to cases where exposure has beenundertaken prior to March 31, 2003 or otherwise totop rated corporate clients only,(vii) In the interest of securing the interest ofstakeholders of IFel, the Government may seekspecific compliance to additional terms andconditions as may be set out from time to time,(viii) In addition to the foregoing, it is immediatelyenjoined upon IFCI:
(a) to expedite the plan for transfer ofassets to ARC and report recovery from NPAs inrelation to the targets set for the FY 2003-2004:
(b) to introduce VRS;(c) not to make fresh recruitment; and(d) not to introduce performance linkedschemes/ESOP.(ix) A monthly report on compliance would besubmitted to the Add!. Secretary (FS) each month,
(i) IFCI should not incur fresh borrowings/deposit
liabilities over and above its outstanding position ason March 31, 2003 except on account of rolling overand restructuring of debt liabilities as envisaged inthe packaged finalized in the meeting ofstakeholders as on November 26, 2002 andDecember 2,2002.
(ii) IFCI would reduce its percentage of net NPAs tonet advances from 22% afthe end of FY 01-02 to9% by end of FY 04-05.
(iii) The Board of IFCI would set a target as regardsthe amount of assets to be transferred by IFCI toARC for the next three years beginning 2003-2004in line with paragraphs (il) above.
:,
9. Additional Terms and
conditions
with Punjab National Bank ~ay be contemplated by the Board of IFe!. A
operational and financial synergy. In this context, the option of merger
IFCI with a large Public Sector Delhi based Bank with which the IFCI has
alone basis. It appears .that the only viable course of action is to merge
that IFCI does not appear to have long term sustainability on a stand
2. The matter has been deliberated at length in Government. It is felt
bad assets.
however, no headway could be made in recovery of NPAs or hiving off the
of this, Rs. 2096 crore has already been released. Operationally,
ten years as a part of the package to restructure the liabilities of IFe!. Out
package in 2001 and yet again committed to provide Rs. 5220 crore over. '\Government of India contributed Rs. 400 crore as part of a capital infusion
to step in fro time to time to bail out IFel from bankruptcy. The
""
be converted either into banks or into NBFCs. The GovernfTfeht have had
Group have recommended that Development Financial Institutions (DFls)
Government for some time. Narsimhan Committee II and Khan Working
future financial institutions has been occupying the attention of the
Dear Shri Singh,
With the model of Development Banking coming under strain, the
Dated January, 29, 2ob4D.O. No. 2/16/2002-IFI Part
MINISTRY OF FINANCE & COMPANYAFFAIRS DEPARTMENT OF ECOOMICAFFAIRS (BANKING DIVISION)'JEEVAN DEEP'10, PARLIAMENT STREETNEW DELHI-110001
. Atul Kumar RaiDirector (EA&IFI)Tel: 23344052
II True Copy /I
ShriV.P. SinghCMD,lFelNew Delhi.
Sd/·(Atul Kumar Rai)
Yours sincerely,
With best regards,
note on the subject, bringing out how the merger could be of useful, is
attached. I shall be grateful, if you would kindly have the issue taken up
with the Board for favorable action is the matter.
34.77%.
at about Rs. 8,400 crore. The percentage of net NPAs to net advances stood at
its asst liability portfolio since 1998-99. The non-performing assets of IFCr stand
IFCI has been facing a problem of mounting NPAs and sever mismatch in
period up to 2011-12.
Government would assist IFCI to the extent of Rs.5220 crore over the ten: ear
under a debt restructuring package. Details of the package under which
Government having assisted IFCI to the extent of RS.523 crore during 2002-03
IFCI has incurred a loss of RS.259 crore during 2002-03 in spite of
losses equal Rs.l, 159 crore.
crore. Loans to assisted companies comprise Rs.19,2 80 crore. Accumulated
borrowings equivalent to RS.18113 crore and foreign borrowings of Rs.2100
Balance Sheet of IFCI as on March 31, 2003 reflects that IFCI has rupee
B. Fi~ancial Indicators of IFCI
balance 50% are stationed at 11 Regional Offices and 7 Branch Offices.
600 employees of which 50% are stationed at Head Office at Delhi while the
IFCI has recently offeredVk S to its employees and now it has only about
Public - Rs.169 .89 cr (26.6%)
Nationalized Banks - Rs.44.82 cr (7.02%)
UTI - Rs.28.50 cr (4.47%)
LIC, GIC and Subsidiaries - Rs.lll.66 cr (17.48%)
IDBI - Rs.202.50 cr (31.71 %)
share at 31.71 %. Present equity Rs.639 crore is held as follows ..
Institutions hold about 63% of the equity stake in IFCr. IDBI holds the largest
holds no direct equity in IFCr. However, Public Sector Banks, and Financial
As of now, IFCI has a paid up equity capital of Rs.638.38 crore. Government
Institution (FI) established in 1948 under a statute, IFCI was corporatized in 1993
Industrial Finance Corporation of India (lFCI) is the first Financial
A. Salient Features
A Note on Merger of IFCI with a Large Public Sector Bank
r;·~
However, about 1/3rd of the total liabilities of IFCI comprising investments from
investors and insulate the rest of the financial systems from an adverse fall out.
2. The assistance from the Government would protect the interests of retail
sustainable in the long run.
is under strain. With gross NPAs at about 60% of the total portfolio, IFC I is r.ot
FIs are the same as that for banks. In this environment, the business model for Fls
The flow of long term funds to F1s has dried up. The regulatory norms for
D. Future of IFCI: The option of merger with a Public Sector Bank
Year 2002- 2003- 2004- 2005- 2006- 2007-12008- I 2009. 2010- 201 1- ."- \.' ~.-
03 04 05 06 07 II I:08 09 10I
I I
IFCI 523 1,573 226 225 225 1,300 186 168 147 6-17 :-.2:0I
(Rs. Crore i
Table: Financial Support for IFC1 as per Restructuring Package
the current year.
extend the assistance as grant. A sum of RS.1573 crore has been released during
crore during 2002-03 as long term loan. Since then, a decision has been taken to
crore to IFCI between 2002-03 and 2011-12. Government have released Rs.523
In this way, the Government would extend assistance of about Rs.5220
Government.
maturity. The interest liability of the overhang --..'ould be met b~
and the current G-Sec rate on SLR bonds held b) PSUs/FIs till ItS
3. Government would bear the difference between the existing coupon rate
KFW.
2. Government would also service the borrowings of the 1F'C1from ADB and
over by the Government.
bonds and retail borrowing of investors below Rs. 1 lakh would be taker:
1. The liabilities of the IFCI in respect of the Government guaranteed S::"R
restructuring package for IFCI. The package envisages as follows -
The Government in consultation with the stakeholders has worked out a
Restructuring of the Liabilities of 1FCIC.
/"---:~J.'- -. ,.....--(~-- ",
losses at 33% could be Rs. 1000 crore. Banking Division I addressing this issue
7. IFCI has Rs. 3000 crore of accumulated losses. The return from set off of
thereby adding to the net profit of the acquirer.
the acquisition are excepted to be higher than the interest cost of the acquisition
date may be near to its realizable value. It is assessed that interest recoveries of
lately making adequate provisions against NPAs and its loan assets on a recent
physical assets including land and buildings of the industrial units. IFCI has been
However, the entire portfolio of loan assets is backed by security of mortgage of
6. While the loan assets of the organization suffer from large :':P:\s.
by about Rs.275-Rs.300 crore annually.
Provident Fund segment, etc., the overall cost of funds of IFCI may come down
of the merged entity. It is anticipated that by repaying the liability pertaining to
raising funds at current low rates. This will bring down the overall cost of funds
prepay the segment of investments which have not been restructured so far. b:
5. If IFCI is merged with a large public sector bank, the merged entity can
utilization of tax shield.
off to the bank in terms of opportunity for growth, consolidation of assets and
preferable because merger of IFCI with a larger public sector bank offers a pay
sector bank with which IFCI has synergy of operations. This option emerged
4. Another option is to consider the merger of IFCI with another large public
seem suitable for immediate implementation.
there has been little progress in hiving off the bad assets so far, the option did not
Assets of IFCI and allow the good assets to be taken over by another player. As
consultation with SBI, PNB, LIC AND BOB. One option was to hive off the bad.
3. Options 10 this regard have been considered by the Government in
investments.
Provident funds, are generally not willing to reduce interest rates on their
p.a. with extension of maturity, but so far the progress is not verv satisfactorv.- . .
interest. IFCI on its own is attempting to get these liabilities restructured at 9%)
Provident Funds, RRBs, Cooperative Banks, etc., are still carrying high rate of
i
serviced at 3% per annum and Rs. 1500 crore at 6% per210
Non-SLR liabilities ofPSBs and FIs is Rs. 4000 crore to be
Rs. 220 crore. This is to be serviced at 6.5%l-U
The aggregate amount of the SLR borrowing by the IFCI is
IAmount perannum Rs.Cr ,)
ParticularsLiabilities Side
asset side is considered separately.
9. To work out the payoff, the per annum cash flow n liabilities side and
Clearing Corporation ofIndia, etc. and ex) Brokerage Firm (lFI1\).
Holding Corporation, IDFC, Power Trading Corporation. STC1.
Technical Consultancy Organizations, (ix) Promoter of :\SE. Stock
Services Company, (vii) Institute for Labour Development, (viii)
Reconstruction Company, (v) Credit Rating Agency, (vi) Factoring
Corporation, (iii) Venture Capital Fund (IVCF), (iv) Asset
Management Development Institute; (ii) Tourism Finance
in a number of activities through its associate organizations such as (i )
f. IFCI, apart from normal operations of a development Bank is engaged
further improve due to working capital relationship of the bank,
Guarantees and other fee based business. Recovery of term loans can
e. Scope for building relationship business in working capital LC
good scope for increase in value.
d. Equity Exposure in companies/organizations by IFCI which offers
prepayment attracts premium as per agreements
c. Long Term loans at fixed rate - good in falling interest rate scenario as
b. Large number of diversified clients from various industries.
increase by over Rs.30,000 crore.
a. Quantum jump in balance sheet by over Rs.15000 crore - Turnover
shield, some of which are given below-
8. There are a number of other benefits of merger to a Bank including tax
available to Public Sector Bank which merges with IFCI.
with Department of Revenue and the benefit of set off of losses would be
Total 1.09Jl
130Of the remaining bad assets and equity exposure, a return of
1% per annum may be assumed in case of a working capital
Banker with business synergy takes over these assets
960
IThe good assets of IFCI as estimated by Kckinsey may be
Taken at Rs. 8,000 crore. With a 12%per annum return, the
Annual inflow is -
I Amount perannum
ParticularsAsset Side
annum post restructurmg by the Government
ILiabilities uncovered by the package are Rs. 8,000 crore IWhich IFCI would service at 9% per annum but on which 48(1
IBanks with lower risk profile may get 6% per annum IRetail investors foreign borrowings etc constitute Rs. ~ tOo
ICrore which is to be taken over by the Government. Hence, Nil
The cost is nil.
Total Cost per annum for servicing IFCI's liabilities_l 83.3
02 Grants to Industrial Finance Corporation of
800 Other Expenditure
01 Industrial Financial Institutions
2885 Other Outlays on Industries and Minerals
year 2004-05 under major head :-:
Institutions. Demands for Grants of Ministry of Finance for the financial
3 The amount is debitable to demand NO.34 Payment to Financial
enclosed.
2. The terms and conditions of the Grant are given in the Annexure
IFCI Tower, 61 Nehru Place, New Delhi during 2004-05.
One Crore only) to the Industrial Finance Corporation of India Limited.
payment of Grant of Rupees 151,00,00,0001- (Rupees One Hundred Fifty
I am directed to convey the sanction of the President of India to the
Sir,
Grant to the IFCI Ltd. during the year 2004-05Subject:
New Delhi
Indraprastha Estate
ERIS & Banking
AGCR Building
The Pay & Accounts Officer
New Dethi : the 5th January, 2005
Banking Division
Ministry of Finance
Government of India
F.No.6(8)/2004-IF.1
c~I
Under Secretary to the Govt of India
(Margaret Gangle)
SdJ-
Yours faithfully,
5289/FA(F)/2004 dated 6/12/2004
6 The sanction issues with the concurrence of IF Unit vide Oy. NG.
5 Utilization Certificate is enclosed.
4 The expenditure is Non-Plan.
Grants-in-aid02.02.31
General Component02.02
India Ltd.
sd/
( Margaret Gangle)
Under Secretary to the Govt of India
1.Cash Branch, Banking Division, with a spare copy with the request that
necessary bill may kindly be prepared and the amount remitted to the IFel
through the AlC payee cheque only in the above address.
2. Under Secretary (IF), IF Unit (DEA), North Block, New Delhi with reference to
Dy. No. referred above.
3. Controller of Aid Accounts and Audit, DEA, s" Floor, Janpath Bhawan, New
Delhi.
4. Department of Economic affairs, Fund Bank - VI, Room No, 276 - G, North
Block, New Delhi.
5. Controller of Accounts, Department of Economic Affairs, Ministry of Finance.
C/o Chief Controller of Accounts, 4th Floor, AGCR, I P. Estate, New Delhi.
6. Executive Director, IFCI Limited, IFCI Tower, 61, Nehru Place, New Delhi -
110019
7. Guard File - 3 copies
F.No. 6(8)/2004- IF. I dated the 5th January, 2005
02.02.31 Grant-in-aid
02.02 General Component
India
02 Grant to Industrial Financial Corporation of
800 other Expenditure
01 Industrial Financial Institutions.
2005 under major head:-
2885 Other outlays on Industries and Minerals
Ministry of Finance for the financial year 2004-debitable
to Financial Institutions. Demands for Grants ofamount sanctioned is
8) Sub-head of loan to which The amount is debitable to Demand No, 34 Payment
of Plan, category of Plan)
7) Planl Non-Plan (in case "Non-Plan-Central non- Plan"
6) Payable in Cash or any By Alc Payee Cheque
adjustment
5) Purpose of the Grant Financial Restructuring of IFCI Ltd.J
Crore only)
4) Sanction Valid Upto Sanction is valid upto 31st March I 2005.
Rs 151,00,00,0001- ( Rs One Hundred Fifty OneAmount Sanctioned3)
IFCI Tower, Nehru Place, New Delhi.
The Industrial finance Corporation of India Limited 61,Name of the Borrower2)
Economic Affairs, Banking Division, New Delhi.
Govt of India, Ministry of Finance, Department ofSanctioning Authority1)
ANNEXURE
("11l'\L Ct;-yq'i<,
Under Secretary to the Govt of India.
(Margaret Gangle)
sd/
submitted to Add!. Secretary (FS) every
month
(ix) A monthly report on compliance would be
schemes IESOP
(d) not to introduce performance linked
(c) not to make fresh recruitment. and
(b) to introduce VRS
2004.
relation to the targets set for the FY 2003-
to ARC and recovery from NPAs in
(a) to expedite the plan for transfer of assets
enjoined upon IFCI:
(viii) In addition to the foregoing, it is immediately
the Company.
appreciation of the valuable services rendered by Shri V.K. Saxena as Director (If
Director with effect from 29th June. 2006. The Board placed on record its sincere
dated 28.06.06 and in his place Shri R.C. Razdan, CGtv1.IDBI was co-opted as
Shri V.K. Saxena, CGM, IDBI resigned from the Board vide his letter
services rendered by Shri K. Sridhar as Director of the Company.
The Board placed on record its sincere appreciatior, of the valuable
June, 2006.
Ombudsman, Chennai Region, resigned from the Board of Directors \\ .e.f :::'3'~
Shri K. Sridhar, representing LIC of India on his becoming Insurance
recovery path by Shri Vinod Rai as a Director of the Company.
services rendered and the contribution made in bringing back IFeI on L1e
The Board has placed on record its sincere appreciation cf the valuable
place of Shri Vinod Rai with effect from 21st August, 2005.
nominee director by appointing Shri Atul Kumar Rai on the Board of Directors in
Since the last Annual Report, the Government of India has changed its
Directors and other Managerial persons
Page 10EXTRACTS
Annual Report 2005-06
IFCI Limited
of India Ltd.
02 Grants to Industrial Finance Corporation
800 Other Expenditure
the financial year 2005-06 under In,ajar head :-
2885 Other Outlays on Industries and Minerals
01 Industrial Flnancial Institutions
Financial Institutions. Demands for Grants of Ministl'y of Finance for
3 The amount is debitable to demand No,34 Payment to
Annexure enclosed.
2. .The terms and conditions of the Grant are given in the
Industrial Finance Corporation of India Limited, IFel Tower, 61 Nehru
Place, New Delhi during 2005-06.
I am directed to convey the sanction of the President of India
to the payment of Grant of Rupees 146,33,00,000/- (Rupees One
Hundred Forty Six Crore and Thirty Three Lakh only) to the
Sir,
Grant to the IFel Ltd. during the year 2005-06Subject:
New Delhi
Indraprastha Estate
ERIS & Banking
AGCR Building
The Pay & Accounts Officer
New Delhi, the 6th September, 2005
Banking Division
Ministry of Finance
Government of India
F.No.2(8)/2004-IF.1
Yours faithfully,
Sd/
(Margaret Gangle)
Under Secretary to the Govt of India
4. The expenditure is Non-Plan.
5. Utilization Certificate is enclosed..
6. The sanction is valid upto 31st March 2006.
7. The sanction issues with the concurrence of IF Unit vide Dy
No. 1652/FAl05 dated 5.9.2005.
8. Receipt of this letter may kindly be acknowledged.
General Component
Grants-in-aid
02.02
02.02.31
1. Cash Branch, Banking Division, with a spare copy with the request that
necessary bill may kindly be .prepared and the amount remitted to the
'IFe( through Nc payee cheque only in the above address.
2. Undee Secretary (IF), IF Unit, (DEA), North Block, New Delhi with
reference to Oy.No. referred above, "
3. Controller of Aid Accounts and Audit, DEA, 5th Floor, Janpath Bhawan,
New Delhi
4. Department of Economic affairs, Fund Bank > VI, Room No. 21'6-G,
North; Block.. New Delhi
5. Controller of Accounts, Department of Economic Arairs, Ministry of
Finance. C/o Chief Controller of Accounts, 4th Floor, AGCR, I.P. Estate,
New Delhi
6. Execwtive Director, lf'Cl Limited, IFCI Tower, 61, Nehru Place New
Delh,ii-1.100'1i!ffi.
7. Gua.f.(illFile - 31(Copies
F.No.6(8}/2004-IFJ dated the 6th September, 2005," .
ccrpor ate clients only.
to cases where exposure has been u~,d-er:a:-:en ;::r!0'
to March 31. 2003 or Jth,=",'.lse '.: :'=>: ra.e ;;
by end of FY 04-05.
(iii) The Board of IFCI would set a target as regards tre
amount of assets to be transrerred b/ IFCI to r-..RS
for the next three years beginning 2003·04 in line
with paragraphs (ii) above
(iv) Recovery from I...JPAs by means other than !hrou;h
sale/transfer 10 ARC \'IOUld be stepped up in I;ne
with the target for reduction 1/1 i~P.A,5
(v) Reduction in the strength of personnel at the rate of
5% points per annum.
(vi) Fresh sanctions and disbur sals would be restricted
advances from 22% at the -er.d .Jf FY iJi·C2::J ?::
IFCI should not incur fresh borto.vir qs/oepo s :
liabiiilie s over and above its outstanding oosition as
on March 31, 2003 except on account of rolling over. \and restructuring of debt liabilities as er.visaqec ~
the package finalized in the meeting of stakeholcer s
as on November 26. 2002 and December 2. 202
(ii) IFCI would reduce its percentage of net i'~PAs '0 n et
(i)and
800 Other Expenditure
02 Grant to Industrial Finance Corooration of India
02.02 General Component
02.02.31 Grant-in-aio
2885 Other outlays on Industries and l..llne~a!s
01 Industrial Financial Institutions
The amount is debitable to Demand No.34 Payment to FinancialInstitutions, Demands for Grants of Ministry of Finance for thefinancial year 2005 -2006 under major head :.
"Non-Plan-Central non-Plan"
Financial Restructuring of IFCI Ltd.By Alc payee cheque
Govt. of India, Ministry of finance, Department of Economlc
Affairs, Banking Division, New Delhi.
The tnduatrial Finance Corporation of India Limited 61, IFC!
Tower, 61, Nehru Place, New Delhi.
Rupees 146,33,00,000/- (Rupees One Hundred Forty Six Crore
and Thirty Three Lakh only)
Sanction is valid upto 31" March. 2005
ANNEXURE
TermsAdditionalConditions
9)
i' Sanction Valid upto
Purpose of the GrantPayable: in cash or anyadjustmentPlan/Non-Plan (in case ofPlan, category of plan)Sub-head of loan to whichamount sanctioned isdebitable
4)
5)6)
7)
8)
1, . I' "'3)' " .. " Amount Sanctioned
r
'-:i':I~ .n;:: " 2) Name of the Borrower...'rtl:· ~.. r~.:! !::~'~..., .. '« ••
Sanctioning Authority1)L.:,
J._' ':
Addl, Secretary (FS) each month
(c) not to make fresh recruitmer-; a:~j
(d) not to introduce per-7o~mar:e :ii-,' ej Jschemes/ESOP
(ix) A monthly report on cornpl.ance w:iJlj be suomi.tee .....,-_--
(vii) In the interest of securing the interest
stakeholders of IFCI, the Government mal seek
specific compliance to additioral .errns and
conditions as may be set out from time to time.
(viii) In addition to the foregoing, it is immediately
enjoined upon IFCI;
(a) to expedite the plan for transfer of assets to
ARC and report recovery from 1'1P/l,sin relat cn
to the tarqets set for the FY 2003-04;
(b) to introduce VRS;
:,
... \'..
General Component
Grants-in-aid
02.02
02.02.31
I am directed to convey the sanction of the President of India
to the payment of Grant of Rupees 42,67,00,000/- (Rupees Forty
Two Crore and Sixty Seven Lakh only) to ,the Industrial Finance
Corporation of India Limited, IFCI Tower, 61 Nehru Place, New Delhi
during 2005-06.
2. The terms and conditions of the Grant are given in the
Annexure enclosed.
3 The amount is debitable to demand NO.34 Payment to
Financial Institutions. Demands for Grants of Ministry of Finance for
the financial year 2005-06 under major head ;..
2885 Other Outlays on Industries and Minerals
01 Industrial Financial Institutions
800 Other Expenditure
02 Grants to Industrial Finance Corporation
of India Ltd.
Grant to the IFCI Ltd. during the year 2005-06Subject:
Sir,
The Pay & Accounts Officer
ERIS & Banking
AGCR Building
Indraprastha Estate
New Delhi
ANNfX\)Kf -p~F.No.2(8)/2004-1F.I
Government of India
Ministry of Finance
Banking Division
New Delhi, the 20th March, 2006
Encl: As above
Under Secretary to the Government of India
(M. Sahu)
Sd/-
Yours faithfully,
8. Receipt of this letter may kindly be acknowledged.
No. SOS/IFAl06dated 2.3.2006.
7. The sanction issues with the concurrence of IF Unit vide Oy.
6. The sanction is valid upto 31st March 2006.
5. Utilization Certificate for the period 2002-03, 2003-04, 2004-
05 and 2005-06 is enclosed..
The expenditure is Non-Plan.4.
2
"
(M. Sahu)UnderSecretary to the Government of India
"
1. Cash Branch, !?anking Division, with a spare copy with the request thal
necessary, bill may, kindly be prepared' and the amount remitted to the lf C]
throuqh Mc payee cheque only in the a~ove address,2. Under Secretary (IF), IF Unit, (DEA), North Block, New Delhi wilh reference to
Dy.No. referred above.'113. Controller of Aid Accounts and Audit, DEA, G' Floor, Janpalh 8h3W311, New
Delhi4~ Department of Economic affairs, Fund Bank - VI, Room No, 27G-G, North
Block, New Delhi5. Controller of Accounts, Department of Economic Affairs, Ministry of Finance.
C/o ChiefController'of Accounts, 4th Floor, AGCR, 1.F?, Estate, New Oelhi
6. ExecutlveDirector, IFCI Limited, IFel Tower, 6'1, Nehru Place New Delhi -
1100.19.7dFile - 3 copies
,,
,
,'-,,4-\ ~ ,F.N> .6(8)/l{)04-IF .1data:f t1W20th M arCll,2 (l) G
,,
"'~' t
by IFCI to Ar~c for the next three years
beginning 2003-04 in ine with paragraphs (ii)
above.
(ii)
IFel should not incur fresh borrowinqs/deposit
liabililies over and al.ove its outstanding
position as 011· Marcil 31, 2003- except en
account of rollill!) over Clll~ r estructuriny of debt
liabilities as envisaqed i,-l the package finalized
in the meeting of stakeholders as 0'1 November
26, 2002 and December 2, 2002
IFel would reduce its percentage of net NPAs
to net advances from 22°/J al tile end cf FY 0 J-
02 to 9% by enel of FY 0-1-05
(iii) The' Board of IFel would set a target as
regards the amount of assets to be transferred
.'
(i)
General Component
Grant-in-Aid
02,02·
02~02.31
2885 Other outlays on Industries and Minerals01 Industrial Financial lustituriuu«
02 Grants (0 Industrial Finance C"'1l1l1alioll (If IlI-di;1
The amount is debitable to Detnand hJo.34 Payment toFinancial Institutions, Demands for Grants cf Ministry ofFinance for the financial year 2'J04 -2005 under major. . .head:
"Non-Plan"
Financial Restructuring of IFel LId,By Nc payee cheque
Govt. of India. Ministry of Finance, Department of
Economic Affairs, Banking Division, New Delhi.
The Industrial. Finance Corporation of India Limited 61, IFCI
Tower, 61, Nehru Place, New Delhi
Rs. 42,67,00,0001- (Rupees Forti T'NO Crore Si:d, Seven
. Lal<h only)
Sanction is valid upto 31 st March, 2i)OG
.'ANf',l!:XUIU~
»>\~\
"Additionaf Terms andcondlucns.
. \
Purpose of the GrantPayable in. cash or anyadjustmentPlan/Non-Plan (in caseof Plan, cateqoryof plantSub.,head of loan towhich amount sanctionedis debitabte
Sanction Valid upto
Amount Sanctioned
Name of theGrantee
Sanctioning Authority
9)
4)
5)6)
7)
8).
3)
" -~I .
{. 1'-"~I\ I.
01);7/2)
/I "'-r' ( t ; C(-,
Accounts and ;\!I(!il
(ix) /\ monthly rel)ol\ on c,,:linl.J\i;'~:e ':,S~J':J L:e
submiue d to (\cr_l! ~es~c.:;ICliy iTS; e2C!' !":~'ri~!1
(e1) 1101 1'J i!:11 c,J _Ice
scilellles/ESOIJ
(b) to illlieduce '\IT,,::
. \(a) to expeuue the pall f'..)1IIa'lsfs! of assets ;:.'
(viii) In addiuon to the fclegD;ll<::, i: _ j,,~i)~r ::',;;113;
entoined upon IFe:
time.
~,
(vi) Fresh sanctions Eli cl ~:is;)'_!!S?!S '"r)!.kJ '-"~
(iv) Recovery flOI11 NI"As iJ,' means 011)(:1 II f!
through sale/lr anslcr to AI"\C 'NGlIlcJ be steIJI.:~(I
upin line wilh the tClI',j2t fu I 3Jucl'()11 ;11I J[J(\~:,)
, r
\II~
Act, 1956 rests with the Government. How can the Government promote the
IDBI and IFCI which are both companies registered under the Companies
I am not able to appreciate the viewpoint that the decision to merge
3. Onus on the Government to decide merger ofIFCI with IDBI
matter.
overnmen had no role in theIf'Cl had NP As amount'...._--
a large part of the loan portfolio turned out to be bad and as on March. 2005 .
borrowing at astronomical rates of interest for the same purpose. Eventually. -order to enable IFeI to increase its loan book size. IFCI also contracted
down by successive decisions of IFCI since 1993 to increase it capital base in
its incorporation. The shareholding of public institutions in IFCI was brought
The Government did not have any shareholding in IFCI at the time of
Government nominee on rFCI
2. Decline in the shareholding of public institutions in IFCI and role of
Rs.4,700 crore in the Balance Sheet as ofY1arch 31.2005.
record operational losses. This· is on top of the accumulated losses of
amounts are excluded from the income, it is clear that IFeI continues to
2005-06. IFCI has shown these amounts as part of their income. If these
Rs.1573 crore in 2003-04. Rs.316 craIe .in 2004-05 and RS.257 crore in
The Government of India has released RS.523 crore in 2002-03.,
Operating Profits ofIFCI
the issues raised by you are as follows:
examined the issue afresh in the light of your letter and my observations on
reiterating your demand for the merger of IFCI with IDBI Ltd. I haveI .
Please refer to your letter No.BAIARD/2005 dated November 3.2005
Dear Shri Acharia,
:\ ovember 18. 2005
NEW DELHI-l 10001
:NDIA
FINANCE MINISTER[NATIONAL
AMBLEM]
\C). i
l'lE
New Delhi-I IOOOl
140, Parliament House,
Member of Parliament
Shri Basudeb Acharia
(p. Chidambaram)
Sd/-
Yours sincerely
With regards,
of Directors/Management and. cannot be premised on a merger with IDBI.
further strategy for and on behalf of IFCI would have to come from its Board
and assure that the institution does turn around on its own efforts. Hence, any
important for the management and officers of IFCI to be more accountable
rendered an illusion of the institution having made profits. It is more
of Rs.5220 crore to IFCI. It is such heavy infusion of assistance which has
beginning and continues to be involved as it has extended financial assistance
Government has no holding at all?
It is true that Government has been involved with IFCI from the
\. \::'Cb,merger ofIFCI and IDBI Ltd. which are both companies. and in one of which
..
9 modified as per the amendment made in the aforesaid Notification.
to be in form 25 appended to the CCS (Pension) Rules with serial );0.7 &:
c) The application for permission for commercial employment will continue
to be satisfied.
b) The factors mentioned in the amended Sub Rule (3) of Rule 10 will have
within one year of retirement.
or held a Group' A' post if the commercial employment is to be taken up
of a retired officer who was a member of a Group •A' Central Civil Servie
a) Permission will be required for post retirement commercial employment
kept in view:-
provision. In granting or refusing permission, the following provisions shall be
Services/posts received on or after 23.1l.2006 shall be governed by the arnendec
commercial employment of retired Group .A· officers of Central Ci\ ii
2. Henceforth all the reque3sts for permission for post- retirernen:
the printed Gazette Notification is attached herewith.
came into force on the date of its publication in the Gazette of India. The copy 0:'
Notification (File No.2701211/2006-Estt(A), dated 23.1l.2006. The Notification
retired Group 'A' Officers, has been amended by this Department \ ide
Rules, 1972 which regulates the post-retirement commercial employment of
The undersigned is directed to say that Rule.10 of the CCS (Pension,'
Procedure for grant of permission to the PensionersJFor commercial employment after retirement
Subject:
OFFICEMEM ORAND UM
New Delhi, Dated 5th December. 2006
Department of Personnel and Training
Ministry of Personnel, Public Grievances & Pensions
Government of India
No.270 12/5/2000.Estt(A)
Copy of Additional Secretary (S&V), DoP&T, for information.
Copy to Comptroller and Auditor General of India
All the Ministries/Departments of the Govt of India
To
Tel: 23093180
Director (E.Il)
(C.A. Subramanian)
Sd -
5. Hindi version will follow.
for their guidance and compliance.
4. Ministry of Finance etc. are requested to note these instructions carefully
affected by the amendment notification will continue to be operative.
3. The other provisions of Rule 10 of ees (Pension) Rules. 1972 not
between employment and self-employment.
(iv) Not distinguish between 'honorary' and 'paid employment' or
Governmental sector.
(iii) Be liberal in granting permission for posts of responsibility in Non-
cultural, social and artistic activity;
(ii) Actively encourage post service employment in scientific, literacy.
practice in professional areas;
(i) liberally grant permission for Directorship of firms/consultancy
(3) of Rule 10 ofeeS (Pension) Rules, 1972 are met Govt may:-
f) If the 5 core concerns stated in clauses (b) to (f) of the amended sub-rule
No. 27012/4/97-Estt.(A) dated 2.12.1997 will continue to be operative.
retirement commercial employment as indicated in this Department's 0[>,1
e) The existing procedure for consideration of applications for post-
application.
10 of the ees (Pension) Rules, do not come in the wav of considerina his. ~
factors mentioned in clauses (b) to (f) of the amended sub-rule (3) of Rule
from the retired officer is to be taken in the form of an affidavit that the
d) Before an application of the retired officer is considered. an undertaking
undertaken by the organization he proposes to join.
he has held in the last three years and the interest represented or work
(c) Whether there is conflict of interest between the policies of the office
or the areas in which he proposes to practice or consult;
areas of interest or work of the organization which he proposes :0 join
in the last three years of his service which is directly related to th~
(b) Whether the officer has been privy to sensitive or strategic information
authority and from the office where the office: retired,
commercial employment has been obtained from the cadre controlling
(a) Whether a "No Objection" for the proposed post retirement
the following factors, namely:-
for taking u any commercial employment, the Government shall have re IZardto
"(3) In granting or refusing permission under sub-rule (2) to a pensioner
namely:-
(ii) For sub-rule (3) the following sub-rule shall be substituted,'I
year' shall respectively be substituted.
(i) In sub-rules (1) and (6), for the words 'two years', the words 'one
2. In the Central Civil Services (Pension) Rules, in rule 10 -
Official Gazette.
(ii) They shall come into force on the date of their publica:ion in the
Amendment Rules, 2006.
These rules may be called the Central Civil Services (Pension)(i)l.
Further to amend the Central Civil Services (Pension) Rules, 1972, namely-
NEW DELHI, THURSDAY, NOVEMBER 23. 2006/AGRAHA YANA 2. : 928. .
PUBLISHED BY AUTHORITY
PART ii - Section 3 - Sub-section (i)
THE GAZETTE OF INDIA
\ \ 1\ , '
conflict with the working of the Government.
by the organization I propose to join will not bring me into
last three years and the interest represented or work undertaken
interest with the policies of the office held by me during the
security and domestic harmony. It will not involve conflict or
activities prejudicial to India's foreign relations. national
~""--~'-!1) The employment which I propose to take up will not involve
(b) For erial number 9, the following shall be substituted namely-
operative Society, etc."
official career, any dealing with the firm or company or Co-
"© Whether the officer had during the last three years of his
substituted, namely -
(a) In serial number 7, for clause (c), the following shall be
(iii) In FORM 25;
(g) Any other relevant factor
may be as a result of buoyancy in industry or in the economy as a whole:
excess" shall not be construed as to cover increase in such benefit that
Explanation:- For the purposes of this sub-clause. the words "far in
excess of those currently prevailing in the Industry.
(f) Whether the proposed emoluments and pecuniary benefits are far in
to integrity and dealings with non-Govenunent organizations:
(e) Whether service record of the officer is clear, particularly with respect
is undertaking any for intelligence gathering.
national security and domestic harmony, and whether the organization
any way in conflict with or prejudicial to India's foreign relations.
(d) Whether the organization he proposes to join has been known to be in
undertakings.
not included normal economic competition with the Government or its
Explanation:- For the purposes of this clause, "conflict of interest" shall
Ite.' E Ctp'!)-
4. S.O. 899 dated the 14th April, 1990
5. S.O. 1454 dated the 26thMay, 1990
6. S.O. 2329 dated the 8th September, 1990
3. S.O. 2467 dated the 7thOctober, 1989
1. S.O. 254 dated the 4th February, 1989
2. S.O. 970 dated the 6th May, 1989
amended by-
3, Sub-section (i) vide number S.O. 934 dated 1-4-1972 and subsequently
Note: - The principal rules were published in the Gazette of India Part II, Section
(F.No.2701211/2006-Estt.(A)
C.B. PALIWAL, JT. SECY
Signature of Applicant
Dated:
Place:
Address:
of any objection by ~ Government.
(d) I agree to withdraw from the commer-lcial employment in case
and dealings with Non-Government Organizations.
(c) My service record is clear particularly with respect to integrity
to the areas in which I propose to practice or consult.
of interest or work ef the organization that Ipropose to join or
last three years of service which is directly related to the areas
(b) I have not been privy to sensitive or strategic information in the
1. Name of the Officer
(in BLOCKletters)
2. Date of retirement
3. Particulars of the Ministry/Deptt/
Office in which the officer served during
the last 5 years preceding retirement (with
duration)
Name of Ministry/ Post Held Duration
Department Office From To
,,4 Post held at the time of retirement and
period for which held
S. Payscale of the post and pay drawn by the
Officer at the time of retirement
6. Pensionary benefits
Pensionexpected/sanctioned Gratuity, if any
(commutation if any, should be mentiOned)
7. Details regarding commercial employment
proposed to be taken up
*amended as per Gazette Notification dated 23rd November, 2006 and circulated vide
DOPT'sOffice Memorandum dated s" December, 2006
Form of application for permission to Central Services Officers to accept commercial
employment within a period of one year after retirement
(SeeRule 10(1) of the Central Civil (Pension) Rules)
FORM 25*'
I hereby declare that -
9. Declaration:-
desires to furnish in support of his request
8. Any information which the applicant
(b) Nature of proposed practice
the field of practice
(a) Professional qualifications/in
indicate -
(i)lf proposing to set up a practice,
(h)Remuneration offered for post/job
job/post
(g)Description of the duties of the
offer of appointment, if any)
of the advertisement, and a copy of the
was offer made (attach newspaper cutting
(f)Whether post was advertised, if not, how
(e)Name of the job/post offered
dealings with the firm
(d)Duration and nature of the official
operative Society etc.
dealings with the firm or company or Co-
three years of his official career, any
© Whether the official had during the lastf
out by the firm, etc.
the firm/type of business carried
I(b) Products being manufactured by
I
operative Society etc.
\ \ ~---.r---'---'(a~)~~N~a~m~e~o~f~t'h-e~f~ir-m~/~co-m--pa-n-y'/c~o--.---------------------------~
'v'~ .
Dated:
Address
Signature of the applicant
by the Government.
(d) I agree to.withdraw from the commercial employment in case of any objection
with Non Government Organisations.
(c) My service record is clear, particularly with respect to. integrity and dealings
that I propose to join or to the areas in which I propose to practice or consult
of service, which is directly related to the areas of interest or work of the organization
(b) I have not been privy to sensitive or strategic information in the last three years
Government.
organization I propose to. join will not bring me into conflict with the working of the
during the last three years and the interest represented or work undertaken by the
harmony. It will not involve conflict of interest with the pclicies of the office held by me
prejudicial to. India's foreign relations, national security and domestic
(a) The emplcyment, which I propose to. take up, will not involve activities
\\ 6
I(-r<g__U ~
Secretary (FS)
JS(IF)
(Atul Kumar Rai)
Sd/-
Yours faithfully,
curtained and I may be relieved from servicew.eJ. February 28 (AN), 2007.
possible opportunity, I shall be grateful, if the period 6f notice may be suitably
2. Since I wish to attend to certain personal and family matters at the earliest
requisite notice in this behalf.
and wish to apply for voluntary retirement. This may please be treated as the
I have completed 21 years of qualifying service as on December 16, 2006
Sir,
Subject: Notice for Voluntary Retirement from service under Rule 48A
New Delhi
North Block,
Department of Economic Affairs,
Ministry of Finance,
(Through Proper Channel)
The Finance Secretary.
To
Dated February 05, 2007
New Delhi
Banking Division
Department of Economic Affairs
Ministry of Finance
Director (IF)
From: Atul Kumar Rai
4. The expenditure is Non-Plan.
5. Utilization Certificate for the year 2006-07 is enclosed..
General Component
Grants-in-aid
02.02
02.02.31
3 The amount is debitable to demand NO.33 Payment to Financial
lnstltutions. Demands for Grants of Ministry of Finance for the financial
year 2006-07 under major head :-
2885 Other Outlays on Industries and Minerals
01 Industrial Financial Institutions
800 Other Expenditure
02 Grants to Industrial Finance Corporation of
India Ltd.
I am directed to convey the sanction of the President of India to the
payment of Grant of Rs. 220,31,00,0001- (Rupees Two Hundred Twenty
Crore and Thirty One Lakh only) to the Industrial Finance Corporation of
India Limited, IFCI Tower, 61 Nehru Place, New Delhi during 2006-07,
2. The terms and conditions of the Grant are given in the Annexure
enclosed.
Grant to the IFCI Ltd. during the year 2006-07Subject:
Sir,
The Pay & Accounts Officer
ERIS & Banking
AGCR Building
Indraprastha Estate
New Delhi
Ministry of Finance
Banking Division
New Delhi, the March 14, 2007
Government of India
ITN t'!t:t<o I?.i:! - ff3F.No.2(8)/2004-IF.1
.. '
Ene!:As above
Yours faithfully,
Sd/
U'k Sahu)
Under Secretary to the Government of india
Tei.No.011-23742636
6. The sanction is valid upto 31st March 2007.
7. The sanction issues with the concurrence of IF Unit vide Oy. No
490llFAl07 dated 6.3.2007.
8. Receipt of this letter may kindly be acknowledged.
U'! - _..
-------
.. ......_• _-.,- II
_-'_-..,
. "
5, Controller of Accounts, Department of E·'::onoillic Affairs, i;i,,' is;.1:,' of ;: "?':2 ~-.
Chief Controller of Accounts, 41h Floor, ;\GCR. !, P Estate i<:::.\' Cei:":
6. CEO, IF.CI Limited, IFCI Tower, 61, 1'Jeh;u PI;:lvj r'!e':: Dedi: - i ;,>"F
., 7. Guard File - 3 copies
4. Department of Economic affairs, Fund i3ank - VI. Room No 273-G ~;::::~ :>~:.,New Delhi
2. Under Secretary (IF-II), IF Unit, (DEA), North Bloc}; iJev. Dei!,: .. i~.;
.Oy.No. referred above.
3. Controller of Aid Accounts and Audit, DEA, 51h Floor, Janpatr 6:,':;'::01:' ':"':. C:;
1. Cash Branch, Banking Division, with a spare copy v:ill1 the r~T:e3: '.i~S '=:,?3S~- .•
bill may kindly be prepared and the amount remitted to Ul'2 IFCi ti!:u_;):' 'r:: :_?~-?
cheque only in the above address.
F.No_6(8)/2004-IF.1 da ted tile 14tlo March, 2007
, , -(". ..'.~ • ~'\r.'- _
."
!.-'
Under Sect e lary t'J U\C \J::;'_·e~ :r~'~r'lt:.f I·,,:";:.:i,.;- 'I ei :'11~~U 1 "L2~i ..12S:~13,
.' ----_- -"
lf C], the Govetrvuent may seek specific ('~'lnl)!i8'lce\0
additional terms an<.:conditions as may be se: c·~t [1'.)1'1
time tu time.(iv) A monthly report 011 corunliance would be SU1;!11;::"d I.::
joint Secretary (W) e2cll rJlul1tll.
(v) IFel LId. will ensure compliance 011 '.119 aUG.1
findings/observation of OIl) Controller of f\id i\CGO'-IJ:\S aid
Audit
cases where exposure 11ClS been uudertaxen, p:ier "
March 31.2003 or olnerwise to top rated corporate r:lieills
only.
(iii) In the interest of sc:;uring tile interest of stakehui'Jc;fS c:
IFel should not incur fresh oorrcw;Hgsidf:p:lSi; :';:;~,iiii!~'
over and above its outstanding positioo as 011 i'rarch 3:,
2003 except on account of rollin9 over and restluttLl;ing rofI
dp.bt liabilities as erw,s<l\JerJill the pc:;ck.;lgo?f;;;al;~-=;.:.n th:-I
meeting of stakeholders as UI1 November 26. 2()Q2 3nd
December 2, 2002.
(ii) Fresh ' sanctions an:J dlsbursats wouid be resh;·:ie'.' \.:.
(i)and
Other Expenditu, e
Grants 10Industria) Finance Corporatlon of IIHJi~
General Component
Grant-in-Aid
Other outlays on Industries and rvlil leiaislndusuial Finaucial lnstilulions
288501
800
02
02.02
02.02.31
The amount is debitable to Demand t-lo 33 Payrllelll to ;:i:lwci;:;'Institulions, Demands Iot Grants of ~,linistry of Fii1il!K':! ftii- 11,:: ;;":;:,,:i;!:year 2006-2007 under major head:
"Non-Plan"
Financial' Restructurinq 01Ir-CI LId.By Nc payee cheque
Govt. of India, Ministry of Fiuance. Deparunent of EO..'I<)IIl;C Ni~Hrs
Banking Division, New Delhi.
The Industrial Finance Corporelion of India Limited C. !rei TO'o':;::,6'
Nehru Place, New Delhi.
Rs. 220,3'I,OO,OOO/~ (Rupees Two Hundred Twenty Cror-s ;\:,,~ TI\:rl',
One lakh on+y)-
Sanction is valid upto 31.1 March, 2007
r....NNExuRE
./,
/2)
TermsAdditionalConditions
Purpose of the GrantPayable in' cash or a~yadjustmentPlan/Non-Plan (in case ofPlan, category of plan)Sub-head of loan to which
. amount sanctioned is debitable
Sanction Valid upto
Amount Sanctioned
'jName of the Grantee
Sanctioning Authority .
. .;..
4)
5)6)
. 7)
8)
......._.. ' ..
3)
2)
1)
notice will not cause any administrative inconvenience, Appointing
months on merits and if it is satisfied that the curtailment of the period of
may consider such request for curtailment of the period of notice of three
under clause (a), the Appointing AuthoritvOn receipt of a req uest
accept notice of less than three months giving reasons therefor~.
(1) may make a request in writing to the Appointing Authority to
Government servant referred to in Clause (a) of the first proviso to sub-rule
As per Rule 48 and 48(A) of the CCS (Pension) Rules 1972. i'A
does not confer any other bene3fit like notional increase in pay etc.
is used for the purpose of reckoning qualify 109 service fer pension' grauity and
the period does not go beyond the date of normal superann rat.on and weight-age
the total qualifying service including the weight-age does not exceed 33 years and
and (B) above will be added to the qualifying service of the officer provided that
acceptance by the Appointing Authority. Weight-age up to 5 years in cases of (A I
3 months notice '" h~ch requires----------------------~~------
of 20 years' qualifying service by givi
(all employees). (B) Employees have option to retire voluntarily or. completion
and Group D employees and (iii) on completiion of 30 years qualifying service
attaining the age of 55 years (Group A & B iOfficers other than (i). all Group C
Officers who had entered service before attaining the age of 35 years. (ii) after
Appointing Authority (i) after attaining the age of 50 years (Group A & B
right to retire and get pensionary benefits by giving 3 months' notice to the
As per the rules governing voluntary retirement, (A) an employee has the
matters at the earliest for seeking retirement.
February, 2007. He has given the reason of attending certain perscnal and family
months notice. He has requested to give him voluntary retirement w.e.f. 28th
retirement on completion of 21 years of service and has tendered less than three
Shri Atul Kumar Rai, Director (IF-I) has requested for voluntary
PUC may kindly be seen.
D~Yl\rrM(,wt-o..\ Fill Noh~ItNNf-f(U«_~- P 14-33
SdI-7/2/07
A.A.(A)
Sd/-S.P. Singh
712'07
SdI-07/2107
Under Secy (Admn)
Joint Secy (A)
Sd/-Alok Bhamagar
6,2,07
Director(A)
SdJS.P. Singh06/02/07
Put up for approval
US(A)
SdI-6/2/07
DFA is submitted please
Affairs (IES Cadre) for consideration.
forward the request of seeking voluntary retirement to Department of Economic
months notice period. Since Shri AmI Kumar Ra.i is an IES OffICer and his
Appointing Authority is DePartment of EConomic Affairs, we may, if approved,
In the instant case, Shri Atul Kwnar Rai has requested to curtail the three
part of his pension before the expiry of the period of notice of three months.
condition that the Government servant shall not apply for commutation of a
Authority may relax the r~irement of notice of three months on the
34
SO(Estt.)
11/04
No amount is recoverable.~d/-
SO (Cash)
11'4/07
Sd/-
Gratuity of Shri A.K. Rai, Director on his availing of voluntary retirement.
Cash Section may kindly indicate whether any amount is recoverable from
Submitted please.
Rai, 000 (Cash) may be requested to issue a certificate in this regard.
As regards giving no dues outstanding certificate in respect of Shri A.~.
Rule 48 A of CCS (Pension) Rules, 1972.
years 4 months and 1 day put in by Shri Atul Kumar Rai, Director as per the
qualifying service. We may, if approved, verify the qualifying service i.e. 21
Thus the period of 15 days i.e. 25.4.87 to 6.5.87 may be deducted from the total
from 21.4.87 to 24.4.87 and no entry for the period 25.4.87 to 6.5.87 is available.
On perusal of Service Book of Shri A.K. Rai it is found that he was on EL
04 monthsFrom 01.01.07 to 30.04.2007
21 yearsFrom 01.01.86 to 31.12.06
16 daysFrom 16.12.85 to 31.12.85
under;
Government service on 16.12.85, .Sh. Rai has rendered the service which is as
In this connection it is submitted that Shri A.K. Rei. lESe 1985) joined :he
Division to put up the matter for the decision of the competent authority.
qualifying service put in by Shri Atul Kumar Rai, Director so as to enable the IES
this Division to give a no dues outstanding certificate and also verify the perioc of
Director (IES), Department of Economic Affairs vide ;FR' has requested
Refer note on page 11-12 IN-ante
35
u.s. - in meetingA.A. (Estt) sa
S.P. Singh
1114/07
Alok Bhatnagar
i1.4.07
Sdi-
Director (Admn)
1114
Sd.'-
Joint Secretary (A)
11.4.07
( Alok Bharnagar)
Sd/ ..
Director(Admn.}
S.? Singh
Sd/-
submitted for approval.
Desired certificate can be given. Draft Office Memorandum c
US(A)
11.4.07
Sd -
furnish the information to DEA as at OFA, pl.
recoverable in respect of Shri A.K. Rai, Director. We may therefore.
Cash Section has verified that there IS no arnour.t
Note at pre-page
36
Discussed with Secretary (FS). In view the Budget Session of parliament
being in progress, it may be difficult to relieve Shri Rai immediatel~ Hence. it
has been decided to relieve him with effect f 3m 31.05.07 hri Rai has agreed to
this. (We may inform DEA (Cadre Controlling Authority ofIES)Sd/-
( Amitabh Verma)
'-~t()I)Fn AP--'JC:IJ IE (Itlil~) ~~
SecyCFS)
(Amitabh Verma)
Joint Secretary
Sd/-JS (Admn)
Sd/-27/4/07
Director (Admn)
Sd/-27/4/07
US(GA) - Secy (FS) may kindly see for approval.
US(A) -- On leave
Sd/-27/4/07
4. Submitted for consideration please.
s per DFA placed below.
Rai, IES(85), Director in this Division from Government service w.e.f. the
3. In view of the above, we may issue notification relieving Shri Atul Kumar
which Shri Atul Kumar Rai is relieved whichever is earlier.
Rai, Director for voluntary retirement from the service under Rule 48- of
CCS(Pension) Rules, 1972 with effect fro 30th April, 200~the date frorr.
approval of the Competent Authority for accepting the notice Shri Atul Kumar
have, vide their O.M. No.13019/30 I/PF-IES dated 26.4.2007, conveyed the
2. In response to our above mentioned O.M., IES Cadre Division of DEA
vide our O.M. dated 7.2.07 at p-72/C.
1972 was forwarded to the rES cadre Division of DEA for conveying their NOe,
(85), Director for voluntary retirement under Rule 48-A of CCS (Pension) Rules,
With the approval of JS(BO&A), the request of Shri Atul Kumar Rai, IES
Ref: Note at p.II.12/ante
37
Director OF.I)
(Atul Kumar Rai)
Sdi-
Whole Time Director in I:rCI Ltd after retirement
3. Accordingly, permission is now sought to take3 up the appointment as a
now been accepted. It is proposed to relieve the undersigned w.e.f. May 31, 2007
undersigned. A copy of the minutes of the meeting of the Boardhel on March 7.
~hiCh includes the resolution passed by the Board is placed below
2. The undersigned had applied for voluntary retirement from Gol. This has
have resolved to make an offer for the post of Whole Time Director to the
The Board of Directors of IFCI, which is a Public Financial Institution,
Permission to take up post-retjrement emp!o\JnentSubject:
Banking Division
Ministry of Finance
Sd/-4/5/07
US (GA) - link officer
5.12.2006. PI. get the position clarified and resubmit.
"X" PI discuss. I think rule position has changed by DoPT 0.\1. dated
Dir(Admn)
Sd.I-4/5.'07
Sd/- 415/07US(GA)
Submitted for consideration and approval please.
necessary action.
if approved, forward his application to IES Division for consideration and further
Appointing Authority is IES division, Department of Economic Affairs. \\" e may.
In the instant case Shri Ami Kumar Rai is an IES officer and his
application in Form 25"
previous sanction of the Government to such acceptance by submitting an
the expiry of two years from i.~e date of his retirement, he shall obtain the
Central Service Group' A' wishes to accept any commercial employ rnent before
Rules "if a pensioner, who, immediately before his retirement was a member of
In this context it is submitted that as per Rule 10 of CCS (Pension)
after retirement.
permission to take up the appointment as a Whole Time Director in IFCI Ltd
In view of the above Shri Atul Kumar Rai has requested to gi\ e him
passed by the Board may kindly be seen at Slip 'X'
meeting of the Board held on March 7, 2007. which includes the resolution
an offer for the post of Whole Time Director to him. A copy of minutes of the
Directors of IFCI, which is a Public Financial Institution have res Dived to make
Sh. Rai has submitted vide his note dated 30.4.2007 that the Board of
Sh. Rai on 31.5.2007(AN) from the Government Service.
been acceded to by Cadre Controlling Authority. It has been decided to relieve
Sh. Atul Kumar has sought for voluntary retirement and his request has
Reference preceding notes and "FR"
38
(e) Whether service record of the officer is clear. particularly w r.t. integriry
intell igence gathering.
and domestic harmony and whether the organization undertaking an) for
way in conflict with or prejudicial to India' foreign relations. national security
(d) Whether the organization he proposes to join has been knO\\11 to be in any
normal economic competition with the Government or its ur:dertakings
Explanation: For the purpose of this clause, "conflict of interest shall not include
the organization he proposed to join.
held in the last three years and the interest represented or \.\ork undertaken b:
(c) Whether there is conflict of interest between the policies of the office he has
proposed to practice or consult.
or work of the organization which he proposes to join or the areas in which he
last three years of his service which is directly related to :he areas of interest
(b) Whether the officer has been privy to sensitive or strategic information in the
the office where the officer retired.
employment has been obtained from the cadre controlling authority and from
(a)Whether a 'No Objection' for the proposed post retirement commercial
taking up any commercial employment, the 90vern~t shall have regard to the
following factors, namely -
In granting or refusing permission under Sub-rule (2) to a pensioner for
Sub rule (3) reads as under;
year from the date of his ret5 irement, he shall obtain the prev ious sanction of the
Group' A' wishes to accept any commercial employment before the expiry cf one
who, immediately before his retirement was a member (If Central Service
As per Rule 10 of CCS(Pension) Amendment Rules, 2006 "If a pens.oner,
notification may kindly be seen at Slip 'X'
A copy of DOPT's OM dated 5.12.2006 along with the Gazette
Reference preceding notes
39
strategic information in the last three
(b) I have not been privy to sensitive or
working of the Government.
propose to join will not bring me into conflict with the
represented or work undertaken by the organization I
by me during the last three years and the interest
conflict of interest with the policies of the office held
security and domestic harmony. It will not involve
activities prejudicial to India's foreign relations. national
(a) The employment, which I propose to take up. will not involve
I hereby declare that-
Serial Number 9. Declaration:
dealings with the firm or company or Co-operative Society, etc".
Whether the officer had during the last three years of his official career. an:
Serial Number 7 (c)
Amended Serial Number 7 & 9 read as under;
come in the way of considering his application.
clauses (b) to (f) of the amended sub-rule (3) of Rule 10 of CCS Pension Rules. do not
from the retired officer if to be taken in the form of affidavit that the factors mentioned in,
Notification. Before an application of the retired officer is considered, an undertaking
Rules with serial No. 7 & 9 modified as per the amended made in the aforesaid
commercial employment will continue to be ih form 25 appended to the CCS (Pension)
As per the DOPT's O.M. dated 5.12.2006 the application for permission for
Any other relevant factor"(g)
industry or in the economy as a whole.
be construed as to cover increase in such benefit that may be as a result of buoyancy in
Explanation: For the purposes if this sub-clause, the words "far in excess". shall not
currently prevailing in the Industry.
(f) Whether the proposed emoluments and pecuniary benefits are far in excess of those
and dealing with non-Government organization.
40
42
Director (Adrnn)
'A' - Is this case of proposed commercial employment of Shr: Rai. in IFCl (a
Public Financial Institution), it is defined in the Indian Companies Act
915/07
Sd/-
Ref: Observations of Dir(A) on NP.
The revised guidelines have since been received
From DOPT & placed below at Flag "x'
"A" above for approval pI.
SdJ-
9/5/07
US(GA)
Sd/-
9/5/07
years of service, which is directly related to the areas
of interest or work of the or4ganization that I propose
to join or to the areas in which I propose to practice or
consult.
(c) My service record is clear, particularly with respect to integrity
and dealings, with Non-Government Organizations.
(d) I agree to withdraw from the commercial employment in case of
any objection by the Government.
In this context it is submitted that Shri Atul Kumar Rai has been assigned the
duties of IF Division sine the last three years. In the instant case he has requested to gh'e
him permission to take up the appointment as a Whole Time Director in IFCI Ltd after
retirement. However, he has not applied for the permission in Fo;m 25 appended to the
CCS (Pension) Rules. We may, therefore, request Shri Atul Kt;mar Rai to appl;- for
seeking the permission in Form 25 as appended in CCS (Pension Rules) 2..!JQ. alo:ig. \\ ith
the affidavit s required under the modified sub-rule 3 of Rule 10 of tr.e CCS (Pension)
Rules so that necessary NOC could be sought from lES Division of DEA. being the
Cadre Controlling Authority in respect of Shri Atul Kumar Rai.
Submitted please.
41
the case may be, seeks to protect its interests through the appointment of the
commercial employment as the Government or public financial institution . zs
that it is not necessary to treat such employment at par \\ ith the normal
fall within the ambit of the expression "commercial employment", lt further says
whose management continues in private hand, such employment will technically
appoints a retired Group' A' officer as Chairrnan/MfvDirector in a Company
may be observed that where a public financial institution/Go ..t.It2.
"Whether a public financial institution/Government appoints a retired
Group' A' officer as Chairman/Managing Director/Director in a company whose
management continues in private hand, such employment will technically fall
within the ambit of the expression "commercial employment". It is. however.
not necessary to treat such employment at par with normal commercial
employment as it is the Government or the public financial Institution. as the
case may be, that seeks to protect its interest through appointment of the retired
officer as a nominee Director. The retired officer would be an appointee of the
institution or the Government though he would receive his payor fee from the
private company. In such cases, approval of the Government for permitting tt.eofficer to accept the appointment in question under Rule ~l) of the CCS (Pensicrn
Rules. 1972, could be presumed:'
re3ad as under:
Department of Personnel & AR OM ',No.27012/26179-Estt(A) dated 16th October. 19/0
The matter was also discussed with Director (A). Provisions in para 5 (ii) of the
Reference preceding note.
Sh. Amrik Singh
US (GA) - link offier
Sdi-
Alok Bbatnagar
DirectonAdmn)
10/5/07
PI. examine, further.
attracted?
And ifcovered, will the portion underlined 'A' on prepage, be
of CCS (Pension) Rules, 1972 ?
1956 after his retirement not covered under the decision No.5 (ii) below Rule 1I)
44
JS(Admn)
Secy (FS)
Sd/-
Alok Bhamagar
15.5.07
Director (Admn.)
It will be seen from the decision 5(ii) Rule 10 of the CCS (Pension) Rules. 1972
that though, IFCI is a Public Financial Institution as per Section 4A of the Indian
Companies Act. '1956 (p-96/CN) yet, the proposed apptt ofSh. Rai by IFC!. a PH can't
be treated as an apptt as a nominee director. In other words, the proposal has to be
treated as, at par, with normal commercial employment. Hence. proposal above may
kindly be approved.
Sd/-
(S.P.S. SANGWAN)
Under Secretary (Adrnn)
. 14.05.2007
retired officer as a nominee Director. Shri Atul Kumar Rai, Director had applied for
appointment in IFCI against an advertisement. Neither the public financial institution
nor the Govt. proposes to appoint him as ChainnanlMDlDirector in a company whose
management continues in private hand. Hence the provisions of para 5 (ii) of the said
OM are not applicable in his case. His case is covered under commercial appointm~nt
after retirement within one year of retirement and approval of the competent authority (in
this case FM) will be necessary for relaxing the conditions mentioned in Rule 10 of CCS
(Pension) Rules, 1972.
1. It is therefore proposed that Shri Atul Kumar Rai may be provided with a copy of
prescribed form 25 for applying for pennission. In accordance with the latest amendment
to the CCS (Pension) Rules, Shri Atul Kumar Rai is also required to give a declaratior.
in the form of an Affidavit as provided in Section 9 (F/,X'). In addition "'\0 Objecticn"
will also have to be taken from the cadre controlling authority i.e. IES Division.
Submitted for approval please.
43
45
public), it may be necessary not only to avoid a vacuum in IFCI after Shri Malia
ACC/ In the interest of shareholders (both government owned institutions and tr.e
for appointment as CMD of SIDBI and his case is already withselected
disbursed.6. It is also known that the CEO of IFCI Shri R M Malia has Jeer;
S. Government has no shareholding in IFC!. Hence, IFCI is pri\ ate in characterHowever, LIC, IDSl, GIC and Public 10Q.emer hold nOTe thaT 58(!~(_ of IECl's
shareholding. Public Sector Sanks and Fls are also maior -ubscrji;er' I.) ~be,~ehtof IFG
Government of India has put together a financial package for IFCI involving assistance
of Rs. 5220 crore to IFCI from 2002-03 to 2011-12 of which Rs.3000 crore stands----
Category %age
Public 38
Fils 22
Corporates IMFs 14
LlC 8
IDSI 5
GIC/Subsidiaries 7
Others 6
Total 100
4. IFel's paid up equity of Rs.639 crore is distributed as follows >-
3. IFCI is a Public Financial Institution under Section 4A of the Companies Act.
1956. The appointment of Shri Rai as a whole-time director i5 proposed with the
approval of the Soard of Directors of IFCI and as such is an appointment by a Public
Financial Institution.
regard the following considerations are also relevant.
the approval of the Government for permitting the officer may be presumed. In this
commercial employment, since it is to protect the intrest of Public Financial Instirution.
management continues to be in private hands, then although the appointment is
appoints a retired Group' A' officer as a CMD, MD/director i:1 a compan) where .he
2. The rule. so far as applicable in this case, is that if a Public Financial Institution
16, 1970 is at 'A' on page 24 ante and may please be seen.
under the CCS rule contained in the DOPT OM NO.27012!26!79-Estt (A) dated Octooer
whole time director in IFCI after his superannuation on May 31, 2007. The position
This is regarding Shri Atul Kumar Rai, Director (IF I) taking up employment as a
\,,,,- /,. "~)YRef: Notes above
Discussed with FM. FM has observed
SCFS)(aT)
JS (BOA)
22/5
Finance Minister
Sd/-PI discuss
21,5,200-
& the IFeI Board has sought his services.
If'Cl on his taking pre mature release from Govt. He 5 professional competent
F.M. may consider granting permission to enable Shri Atul Rai to join
Secretary CFS)
(Arnitabh Verma:
Joint Seretar: (BO)
May 21, 2-)07
Sd/-
9. In view of the foregoing, the apprCi"al ofFM rna\ be SJ)ught te, allo\~ Shri Rai :,)
join IFe! as a whole-time director after his superannuation,
nomination by the PFI is on its own Board..
there is a stronger case for presuming the peonission of tr.e C,)vernmem \~her: the
Group A officer by a PFI on the Board of the private compan:'. then J~ :he sarr e .1)::,,"1':.
Board. If Government permission is not required in case cf nomination of c. retired
nomination of a retired Group' A' officer by a Public Financial Institution on its 0\',11
Government permission may be presumed. Here the issue mder consideration is the
Group 'A' officer by a Public Financial Institution (PFI) on a private company. the
8. The rule quoted at 'A' on page 24 implies that in case of r.ornination of 3. retired
package for financial assistance which has ~een approved by the Lnion Cabinet.
operationally for last five years with the only involvement of the Government being the
he has held in the last three years and interest of If'Cl. IFeI has been at it stand still
assignment and whether there is a conflict of interest between the pclicies of the office
been privy to sensitive or strategic information which is directly related to }-_isproposed
7, There is the issue as to whether Shri Rai having worked as Director (IF.I) has
leaves IFe!, but also to ensure continuity at the top management level,
US(A)
31.5.2007
Sd/-
Director(A)
31.5.07
Sd/-
Secy(FS)
Sd/-
30.5.07
F.M.
sa(Subba Rao)
Secretary. DEA
30.5.07 /'
dated 26.1 1.2006 placed bet iw. -IX) of DOPT Notification
May be approved subject to t he Officer gi\ ing the
FM
Secy IDEA
Secretary (FS)
(Vincd Rai)
30.5.2007
Sd/-
acquitted himself in handling policy issues of Banks & Fls,
o..c~~
professionally competent. has a good track record and has
whole time director on the board of IFe!. The Officer is
Approval of FM is sought for Shri Atul Rai to join as a
Rai's request of voluntary retirement is at p.84iCF.
for Indian Economic Service Officer, Secv DEA. ----=---may _also see the pr~osal. Acceptance of Sh. Atul
that since DEA is the Cadre Controlling Authority
46
SO (Estt)Sd/-
1/6/07
US(Admni
~
Sd!-
received and letter handed over to him
Shri Rai's declaration has been
US(A)
Director (Admn)
31.5.07
Joint Secretary
(Arnitabh Verma)
Sd/-
JS(Admn)
31.5.07
(Alok Bhamagar)
Sd!-
Dir(A)
31.5.07
(S.P. Singh)
Sd!-
Placed below for approval, pI.
Draft letter to Shri Atul Kumar Rai is
47
(TR-u r:: (t'Pi)-........
(Ami Kumar Rai )
Sd. -
315t May, 2007......_ ---'Dated:
Place:
4 Flag Staff Road, Civil Lines, Delhi-54Address:
objection by the Government.
(d) I agree to withdraw from the commercial employment in case of any
dealings with Non-Government Organizations,
(c) My service record is clear, particularly with respect :0 integrity and
which I propose to practice or consult.
or work of the organization that I propose to join cr to the areas in
three years of service, which is .~irectly related to the areas of interest
(b) I have not been privy to sensitive or strategic information in the last
will not bring me into conflict with the working of the Government.
represented or work undertaken by the organization I prcpose to join
office held by me during the last three years and the interest
harmony. Itwill not involve conflict of interest with the policies of the
prejudicial t India's foreign relations, national security and domestic
(a) The employment, which Ipropose to take up will not involve activities
Staff Road, Civil Lines, Delhi-l l 0054, hereby declare that -
of Economic Affairs, Banking Division, son f Shri R.A. Rai, resident of 4 Flail
I, Atul Kumar Rai eIES: 1985), Director, Ministry of Finance, Department
DECLARA TION
1) I t:I--v
Under Secretary to the GO\ ernment or lr.dia
Sd -(S P S Sang-van:
Yours faithfully.
the mandatory declaration by you as in the enclo ed Annexure.
been considered and the competent authority has approved the proposal subject to
up the post of whole time Director in IFCI after retirement. The proposal has
Please refer to your request dated so" April, 2007 for permission to 13.K..:
Sir,
Subject: Permission to take up post-retirement employment
DELHI - 110 054
Civil Lines
4, Flag Staff Road
Director (Ret d)
Shri Atul Kumar Rai, rES
To
'd D 11' ,5' T '"'l ' - -_,ew e 11, I ' . une. _UU,
(Banking Division)
Department of Economic Affairs
Ministry of Finance
Government of India
A-1901lf229/2002-Estt.
,!.~, <.r __ )
, .'__;_t\\_'
ii) Performance Linked Incentive:
10,000 - 1,50,0001-
Salary of Rs, 1,00.0001- p.m. in the pay scale of RS.l.'JO.uOI:\-
i) Pay:-out hereunder:May 31, 2012 of the Company and to the payment of remuneration as set
2007 and redesignated as Managing Director \v.e.f. J Jly 1I. ::;0(, upo
appointment of Shri Atul Kumar Rai as Whole Time Director '.\ .e.f June .
accept, consent of the members, be and is hereby accorded ~orthe
according approval, which the Board of Directors is hereby authorized to
modifications and conditions, if ar.y an any authorir, .nay iJ~1?OSe\\ h.le
Company and such other approvals as may be required. and such
the Companies Act, 1956 and Article 162 of Article of Association of the
269, 309, 311 read with Schedule XIII and other applicable prov isions or"RESOLVED FURTHER that subject to the provisions of Section 198.
liable to retire by rotation."
of Director by and is hereby appointed as a Director of the Com pany r.ot
in writing, proposing the candidature of Shri Atul Kumar Rai for the office
Section 257 of the Companies Act 1956, received a notice fron: a member.
General Meeting and in respect of whom the Company has. pursuant to
of the Companies Act, 1956, holds office upto the date of this Annual
Company w.e.f. June 1, 2007 and who as per the provision of Sec.ion 260
Additional and Whole Time Director by the Board of Directors of the
"RESOLVED that Shri Atul Kumar Rai, who was appointed as a
the following resolution, as an Ordinary Resolution:
8. To consider and, if thought fit, to pass, with or without modification: S I.
NOTICEFrom Page 3 & 4EXTRACTS
Annual Report 2006-07
IFCI Limited
Premium not to exceed Rs. 40001- per annum.
ix) Personal Accident Insurance:
Actual expenses incurred for self and his family.
viii) Medical Benefits:
once in two years for visiting any' place in India.
Entitled to travel with family, by any mode, i.e. Air. Train. Road
vii) Leave Fare Concession:
Admission and Life Membership Fees).
Fees of clubs, subject to a maximum of two clubs .excluding
vi) Club Fees:
outstation journey for official work.
Actual expenditure to be reimbursed by the Company for
v) Travelling, Boarding & Lodging:
Reimbursement of conveyance expenses of Rs.25,OOO/-p.m.,
or
official and private purposes.
Free use of company's car (cost upto Rs.IO lakh) with driver for
iv) Conveyance:
gardener shall also be borne by the Company.
Company. The expenditure incurred on providing security and
which will be used for official purposes, shall be borne by the
b) The electricity charges for the security lights and for one room.
Allowance @ 30% of Basic Pay
In lieu of free furnished accommodation. House Rem
Or
Rs.51akh
Company. The cost of furniture/furnishing shall not exceed
a) Free furnished accommodation to be provided by the
iii) Housing:
Board
\ 4-1As may be decided by the Remuneration Committee and the
provisions of schedule XIII of the Companies Act, 1956."
shall be paid as minimum remuneration subject to compliance of
profit in any financial year during his tenure, the aforesaid remuneration
'RESOLVED FURTHER that in the event of absence or inadequacy of
from time to time in IFCI.
AdministrationlHR Circulars and Office Orders as may e in force
the Staff Regulations of IFCI and other Rules and Regulations.
Subject to the above, in all other matters. he will be governed byj
retirement/exit from IFCI.
shifting of household goods to hometown at the time of
Single fare journey by entitled class for self and family and cost of
xvi) Retirement Fare Concession/Shifting of household goods:
special allowance on monetary perquisites, which are taxable,
IFCI to bear tax in full on non-monetary perquisites and to pavI
xv) Payment of Tax on Perquisites/Special (Perquisite) Allowance:
The company shall provide telephone at residence for office use,,
xiv) Telephone:
be calculated on the basis of last pay drawn.,
which may be lying to his credit. The amount of leave salary shall
Entitled to encash earned leave at the time to retirement-exit.
xiii) Encashment of Leave on Retirement:
As per Staff Regulations of the Company
xii) Leave:
service.
excess of six months shall be reckoned as a completed year of
15 days' salary for each completed year of sen/ice. Part service in
xi) Gratuity:
: 15% of pay(b) towards Superannuation
FundiAnnuity Fund
: 10% of pay(a) towards Provident Fund
Company's Contribution:x)
in such manner as it may deem tit."
necessary or desirable or to settle any question or difficulty that rna- arise,
authorized to do all such acts, deeds and things as may be deemed
resolution, the Board of Directors of the Company be and is hereb ,
"RESOLVED FURTHER that for the purpose of giving effect to this
Schedule XIII to the Companies Act, 1956 as in force from time to time,"
(including perquisites) within the ceiling limits in that behalf laid dov,n in
authorized to alter and vary the aforesaid terms as to remuneration
"RESOLVED FURTHER that the Board of Directors be and is hereby
'J •, C,ij''--';- _:_
Meeting held on the 23rd September. 2002.
This was also approved by the shareholders at the Annual General
the Board.
Stock option ad performance linked incentive as may be decided b)
Consolidated pay of Rs.l ,00,000 p.m.
appointment of Shri V.P. Singh as Chairman & Managing Director with effect
from the 1stOctober, 2001 to the 30th September, 2003 and fixed his pay as under:
meeting held on the 251h September, 2001. and the Board approved the
Thereafter, the matter was considered by the Board of Directors at their
These shares could be purchased after three years at Rs.l 0/- per share.
month. Besides, ESOP upto 2 lac nos. of equity shares could be considered.
It was felt that salary of CMD could be Rs.l lakh to Rs.I.S lakhs per
Salan' of CMD
meeting held on the 5th September, 2001 had, inter-alia suggested as under:
constituted a Nomination Committee for selection of CMD. The Committee at its
The Board of Directors at their meeting held on the 19[h June. 2001 had
Chairman & Managing Director, IFCI
Re: Terms of appointment ofShri V.P. Singh,
Confidential
THE M:EETINGTO IiHELD O.. TIIE 27TH~O\·E\lBER.:00
MEMORANDUM TO THE BAORD OF DIRECTORS OF IFCI FOR
ItemNo.5.2 of the AQendaMemorandum No.443/2002-2003
(Human Resoruces Department)
IFCI Ltd., New Delhi
Dated the 26th November, 2002
Executive Director
(R.\1. \-falla)
Sd/-
the matter to Remuneration Committee of Directors.
of the Board. The Board is therefore requested, if considered appropriate, to refer
DirectorlWhole Time Director should be reviewed by a Remuneration Comminee
Corporate Governance, any remuneration or compensation payable to Executive
5. As per Clause 49 of Listing Agreement with Stock Exchanges relating to
although the same is provided in the pay scale of WTD/ED.
please also be observed that no annual increment has been paid to Shri V.P. Singh
-~- "Stock Options and Performance Linked Incentive" payable to Shri Singh. It may
referred in para 1 above, the Board is requested to consider and take a view about
4. Keeping in view the terms regarding 'Pay of Shri V.P. Singh, as CMD, as
Director are vacant.
3. Presently, there are two Executive Directors and two posts of Whole Time
Executive Director: Rs.50,000 - 5,000 - 75,0001-
Whole Time Director: Rs.75,000 - 1,00,000/-
under with usual perquisites applicable to such posts:
fixed the salary of the post of Whole Time Director and Executive Director as
Earlier, the Board at their meeting held on the 4th May, 2001, had also2.
" ,
Yours faithfully.
se(Raman Kuma' Gaur)
Under Secretary to the Govt. of India
Tel.No 011-23748706
such a need arise.
is intimated that Government of India would assist IFel Ltd. in case
3 In so far as the financial provision of RS.1300 crore IS concerned. it
Convertible Debentures held by the Govern
not exercise its conversion option for the aforesaid Ootio ally
2. On due consideration, the Government has decided that it would
crore held by Government of India and letter NO.IFCIIGOI/2007 dated
3~01\egardin9 package of assistance to IFel
I am directed to refer to your letter NO.IFCI1GOIl2007-1277
& 1287 dated October 1 and October 3, 2007 respectivety regarding
IFCI's Optionally Convertible Debentures
Sir,
ToShri Atul Kumar RaiChief Executive Officer & MDIFCI Ltd
New Delhi
Subject: Optional Convertible Debentures held by Gol - Financial
Assistance to IFCI regarding
F.No.6/B/2004-IF-1
Government of India
Ministry of Finance
(Department of Financial Services)
Jeevan Deep Building, 3rc Floor
Parliament Street, New Delhi
Dated December 12,2007
IMMEDIATE
) / I f
l "1- u
,~ ,; ••• ~ ; " ••• " _<0_ ,. __ •• __ ., - - -_ .•
take place.
Para (ii): The year-wise detail of financial assistance provided t IFeI bv the
Govt. of India is as under :-
IFY 2001-12002-03 2003- 2004- 2005- 2006- 2007- 2008-
02 04 05 06 07 08 09
Assistance 1,573 316 300 210.31
Disbursed as Optionally as As As As nil ~ii
I (Rs. loan Convertible grant grant grant grant
crores) debentures
PNB was also one of the options considered. However, merger did not
included merger with a bank/FIs. Possibility of merger of IFeI with
Para (i): Various options were explored to restructure IFC!. which inter alia.
With reference to your letter dated 24.07.2008 on the above subject and to
furnish the desire information as fellows»
Sir,
Seeking information under Right to Information Act, 2005 by one
Shri Suresh Kumar Gautam
Subject:
Delhi-110 095
Behind Vivek Vihar Police Station
E-124 Jhilmil Colony
Shri Suresh Kumar Gautam
To
Parliament Street, New Delhi
Dated the March 2i4, 2009
Jeevan Deep Building, 3rd Floor.
Department of Financial Services
Ministry of Finance
Government of India
F.No.l(44)2008-IF-I
f27__
14-i
.... - -
This issue with the approval of ePIO.
Parliament Street.New Delhi-110 001 - Tel: 23745128
Department of Financial Services. Jeevan Deep Building. 3:~Floor.
Ms. Vinita Kumar, Appellate Authority. \linistr; of Finance
Financial Services), Ministry of Finance is given belov-i-
3. The name, address and phone :10. of Appellate Authorit- (Department of
financial system.
risks, safeguard the interest of small investors and salvage the credib.lity of the
The financial package was meant to prev ent default. mitigate systemic
f I
This office has received a copy of OM from the 'Lok Sabha Secretariat'.
regarding affairs of IFCI Limited and its subsidiary companies. Along
with this OM, the Lok Sabha Secretariat bJ.s :" :-'.'.::;;.. ;" 1 ,;.~?:..." the
complaint. The complaint has raised various issues against the working of
IFeI Limited (The Company) and its various subsidiary companies. This
office is directed to examine the allegations and submit a report
accordingly. Therefore, in exercise of the powers conferred by sub section
(1) and sub section (7) of Section 234 of the Companies Act, 1956 (herein
Sub: REFERENCE FROM LOK SABH.A. SECETARl.A.T N THE
MA ITER OF IFel LIMITED AND ITS SCBSIDL-\R Y
COMPANIES .:
IN THE MAITER OF: ORDER UNDER SECTION 234(1) READ
WITH 234(7) OF THE COMP.A.J'iIES ACT. 1956 TO IFC!
LIMITED.
22.04.2009
E-mail: [email protected]
5/367/09ffC/( comp)/650
To
IFCI LIMITED
!FCI Tower,
61, Nehru Place
New Delhi
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPAl"JIES
NCT OF DELHI & HARYANA
4TH FLOOR, IFCI TOWER,
NEHRU PLACE, NEW DELHI - 110 019
information/explanation etc.
a. Cumulative amount of Loans granted against shares pledged b:
the promoters during 2007-08 and in the three quarters ending
31.12.2008 in 2008-09. What was the percentage of such loans
to total loans granted by IFeIduring this period?
b. The list of ~oans granted to the above noted specific companies
andlor to their promoters along with re-titled copies of BOD
resolution indicating the amount of loan, rate of interest,
amount repaid, balance as on the close of financial year ending
31.03.2008, 31.12.2008 and also as on the dale of acquisition
of shares, max debit during the year, date(s) of approval and
disbursement of each of such loans, market rates of the scrip at
the time of granting loans, margins, date, date at which such
shares were acquired and reasons for acquisition with cop: of
the resolutions acquisition and also state if an: of these
acquisitions were off market transactions, if yes date reasons
thereof
followingfurnish theregardIn thiscompanies.
after the Act), the undersigned calls for further information/explanation in
Duplicate on the following points/allegations/issues raised within 10 days
from the date of this order:
1. Granting of Loans against shares pledged by promoters and
acquisition of such shares by IFCI : It is alleged that shareholding
of Rajus in Maytas Infrastructure Limited got reduced following
acquisition of its 17.4% shares by IFCI which were pledged to it
by the promoter family. In addition IFCI has advanced loans to
Unitech Limited, United Spirits Limited. Core Projects Limited
and Lupin against pledge of shares by the promoters of theses
\s:D
underwritings agreements? If yes, names of the parues. amount
e. Whether any fee or commissions \\ ere
d. How IFCI justifies such sub undertaking?
devolved and the present market price of such shares.
underwritten and the rates on the dates when these shares \\ere
c. Indicate the rates of which shares \\ ere underwritten or sub
the subscriptions to Hindalco was without Board approval.
agreements and furnish the BOD resolutions as it is alleged l131
b. Whether any approval of the Board \\ as taxer prior :,~
of undertaking on IFeI.
contracts, authorizing resolutions. reasons for such de' elution
detailed note on such transaction. specific dates of such
Hindalco 'and it devolved on IFC I? If ~es. please furnish 2.
a. Is it true that IFCI has underwritten shares of T3t3 \1clwrs ;::.::.:
Please state:
Times, on 31.10.2008 indicatinz a loss of Rs. 120 crore to {Fe!
to Hindalco Limited. A News item also appeared in the Business
alleged to have subscribed and disbursed as sum of Rs. 1: 0 crore
250 crore by If'Cl which devolved on it. In addition :0 this. IFeI !5,,---
underwriting shares of Tata Motors Limited to the extent of Rs.
and his Whole Time Director Shri S.K. Mandal in the matter of
been freezed by Shri Atul Kumar Rai, CEO and \1D of company
limited: ~t is alleged that crores of R~es belonging to public h3\-e
2 Underwriting of shares of TATA Motors Limited and Hindalco
furnish a copy thereof
Maytas or any of the above noted companies? If yes. please
in BOD meeting or otherwise, wrt acquiring the shares of
MR DMRC in particular, had expressed dissent or negativity
c. Whether any of the directors of the company Dr. E. Sreedharan,
\S \\
company. However, it is understood that Shri Arul Kumar Rai has
Industrial concern. It is an Investment and security dealing
alleged by the complainant that DSP Merlll Lynch is not an
4 Loans to DSP Merlll Lynch through J\-1 Financial Services. 1. is
highlighting of the transaction with Mr. Khandelwal.
purchaser of such Loan assets specifically indicating and
amount of receipt of final sale consideration, names of the
which the documents of loan assets were transferred, date and
amount received as earnest money and dale of receipt. date on
company in the last two financial years ending 31.03.2009,
b. List of all Such NPA Loan assets sold/transferred by the
of the borrower amount advanced and the NPA amount.
a List of all NP A loan Assets of the Company detailing the names
~ Please submit:
person (one Mr. Khandelwal) only against the deposit of earnest
NPA loan assets have been sold and transferred to a particular
moneys. It is alleged by the complainant that a good number of
Sale of NPA Loans Assets only against the deposit of earnest3
educational qualifications and experiences at different posts.
including the post held by him pre and post retirement. his
populists given to Shri Mandai pre and post superannuation
g. A comparative head wise chart /details of remunerations and
all the relevant documents.
post facto sanction was taken? If yes, please furnish topics of
Whether this decision was taken by Shri Atul Rai and an ex-
age of superannuation? If yes, on what authority date etc.
f. Whether Shri S.K.Mandai has been retained by IFCI after the
interested with the sold party?
so paid and whether any of the directors or their relatives were
pointing to the specific cases. In this regard please furnish the
copies of resolutions, salaries and perks, comparative chan of
salaries and perks of the following incumbents to the salaries and
perks to the CEO lMD of IFCI Ltd. And their predecessors. in the
respective companies both as on the date of their appointment and
sanctioned a loan of Rs. 350 crores to the company through JM
Financial Services and a handsome commission has reportedly
been changed hands. In this regards, furnish:
a. Complete details. copy of account BoD Resolutions. Eligibility
Norms Loan Agreements wrt to all loans sanctioned to DSP
MerlIl Lynch (DSF, indicating separately whether such Loans
were through JM Financial Services or otherwise.
b. Whether any commission were paid for such transactions?
c. Whether the loan to DSP is regular or NPA as on 31.3.2008 and
31.3.2009?
d. What are the Norms of IFCI for grant of loans to non Industrial
undertakings? Please support your reply with RBI, ~'10F
circulars and the Objects of the company as per MOA of the
company or any of other ruJes and regulations on the basis of
which IFCI has granted Loans to DSP or any of the other Non
Industrial undertakings.
e. Whether (FCl has granted loans to other non industrial/financial
undertakings in the last two financial years? If yes, Please
furnish a list thereof?
5 Appointment of Personnel on IFCI' s Subsidiary Companies and
appointment of Junior Level Officers at very Senior level: It is
alleged by the Complainant inter-alia, that Varioos persons favorite
of the present CEO have been appointed al exorbitarn salaries
against norm. In the company and its subsidiary companies b:
Development ~ILD (formerly Institute of Labour
Development) headquartered at Jaipur respectively. In this
Dutv of Institute of Leadership..Officer on Special
as CEO of IFCI Infrastructure Development Limited and on
d. Appointment of Shri Shavender Tomar and Ms. Pooja Mahajan
appointment and selection process of Ms. Pooja?
Subsidiaries? Whether Mr. Atul Kumar Rai had any role in the
past and present officer of IFCI Limited or any of its
Limited. Whether Ms. Pooja Mahajan is related to any of the
remuneration and perks to the ~ID of Foremost Factors
Remuneration and perks paid to Ms. Pooja VlZ a viz the
49.84% Shares): Please furnish a comparative chan orFactors Limited (An associate Company in which IFeI holds
c. Appointment of Ms. Pooja Mahajan as CGM of Foremost
the salary so drawn by him?
he was holding in IFeI immediately prior to his retirement and
appointed as MD of subsidiary Company. What was the post
Limited who retired from IFCI Limited and later was so
b. Shri A.K. Choudhary as MD of IFCI Venture Capital Funds
Limited .
a Smt. Ramesh Chandra as MD of IFCI Financial Services
company andlor drawing salary in other company?
Also state whether any of these persons are MD/\\'TD in any other
XIII to the Act has been obtained by the respective companies?
Also specify whether any approval under section 269 r/w schedule
the provisions of section 198 r/w 309 of the Companies Act 1956.
of IFCI of these incumbents. Calculation of the Profit in view of
by them immediately prior to their appointment in the subsidiaries
as on 31.3.2009, qualifications and experiences, last salary drawn
\slt-
regard please furnish the salary and perks drawn by these
employees from IFCI as well as from these organizations prior
and after there appointment of these positions. What are their
financial powers of approving and granting expenses and
advances? Details of their tour expenditure and DA from Delhi
to Jaipur and Back since such appointment along with the tours
taken with Mr. Atul Kumar Rai and Javed Yunus.
6, Astronomical Pay Package and Payment of Performance Linked
Incentive to Officers: The complainant h~ referred 10 an HR
Circular 99/2007 dated 09.08,2007 and No. 912008 dated
21.08.2008 issued by IFCI. Please confirm and furnish copies
thereof. Please furnish:-
a The details of Pay scales and performance linked lncenti ves
paid to various officers and subordinate staff and other
employees at each scale in the last two financial years in
comparison to the similar pay and incentives given in the year
immediaiely prior to implementation of such circulars,
b. Justify the increase particularly in view of the fact that IFCI is
surviving only on Government Support and also justify the
compliance or otherwise of the directives issued by GOI vide
Ministry of Finance (Department of Financial services) lener
No. 2(16)12002-IF Dated 23.09.2003.
c. Whether IFCI has decided to credit a lump sum amount to the
credit of employees which they are still in service whereas
pension is payable only after retirement? If yes, please furnish
complete details and amount so credited till date.
d. What is the pension policy of IFCI and its subsidiary
companies?
\SS
Cricket Matches. IBN Award and Diwali Gifts: Please furnish
8, Crores of Rupees spent in advertisement during One Day
Also state how the [FeI justifies such increase inexpenditure.
details of Cars sold transferred during: the last two financial Years.~ .
registered in the name of the company? Please also furnish the
have not been provided with cars. Whether all the cars are
Also indicate a list of officers above the rank of Managers who
car
of present
allocation
the
prior to of Cars
provisionProvide
to thethe gWhom
to Officerprovided A. thorizi by Fe;
of thehe Cars Resolutioi : incurred:ate c~IPurchase)
N ation Model of BOD ExperiencePrice, the
IOfficer
s of POLCost Name 6f Design Make andOateI
Make and
IModel 0
provided to officers in the following format:
furnish the list of cars with IFCI inditing the Car purchasedid
. 7 Provision of Honda City Cars tuuRior Leye! Oftlcer;;:' p!ea~e
'e;:{
I_ J
.,
------------ .....~.~.. ,(.,.:.. .... :..... -
Yunus as the ED ofIFCI.
b. Please also submit the dale and manner of appointment of Shri
has been taken in this regard?
a. Whether Ire! is aware of such complaints? If yes, what action
Please submit.-
to a complaint by Hardicon Employees Welfare Association.
Hardicon Limited. The complainant has also enclosed and referred
numerous complaints against him in his capacity as ~fD of
administrative advertisement and estate matters. There have been
Yunus, ED is overall in charge of almost all expenditure -
9. About Shri Javed Yunus, ED. IFCI: If is alleged that Shri Javed
such expenditure in any way?
Tomar were in any way associated in the process of incurring
f Whether Shri Javed Yunus, Ms. Pooja Mahajan, Shri Shavender
Advertisement and Gifts.
committee and approval minutes of the cornminee for such
Promotion? If yes, Please furnish a copy constitution of such
committee "for expenditure on advertisement and Business
e. Whether IFCI has constituted a Committee like purchase
Bills/vouchers.
"Diwali Gifts" were booked along with copies of the
"Business Promotion" and other heads under which alleged
d. Also furnish the details of expenditure incurred under the head
were incurred.
c. The names of the agencies through which such expenditures
b. INB Awards since July 2007
one cricket Matches since July 2007,
\h~, _/ r /
a. The details of expenditure incurred on advertisements during
WTD.
and Perks given to Shri Mandai pre and post appointment as
Company? Also furnish the comparative chart of Remuneration
duties and roles assigned to Shri Mandal as \VTD of the
process of his appointment as WTD of IFe!. What are the
d. Date of superannuation of Shri S.K. MandaI and the selection
appointment of CEO of IFCI?
c. Date of appointment and the selection process of Shri Rai for
thereof.
appointment as CEO of IFCI? If yes, the capacity and tenure
b. Whether Shri Rai was on the Board of {FCI B.::or,j his
a The posting and remuneration of Shri Rai before joining IFCL
information:
irregularities. In this regard please furnish the following
Mandai and Shri Javed Yunus alleging mis-deeds and
and activities of Shri Atul Kwnar Rai accompanied by Shri S.K.
10. The Role of trio-Serious allegation have been raised on the role
DIN 3 form with this office.
f. Please submit DIN details of Shri Yunus and date of filling of
Please support your reply with BOD resolutions if any in this
regard.
e. What are the authorities and work delegated to Shri Yunus?
IFCI
Travelling, DA or incentives etc. from Hardicon and also from
Yunus is drawing Salary Perks ord. Whether Shri Javed
Limited be furnished.
Yunus at the time of his appointment in IFeI and Hardicon
c. The comparative chart of Remuneration and perks given to Shri
__Jt -,../
:-::7
e. Din details of Shri Rai and Shri Mandal and dates and SRN of
filling DIN 3 Form with this office.
11. New Year party and get to gathers: It is alleged that Shri A.K.
Choudhary organized a gala extravaganza New Year Party/Get
together in January 2009 in India Habitat centre in Honour of Shri
Rai. Please furnish the Bill of amount paid to Habitat Centre by
IFCI or IFCI Venture Capital Funds Limited or any of its
subsidiaries. Please also justify such expenditure and the purpose
of such get together.
12. Government assistance to IFCI and accounting treatment there
of. It is stated that IFCI had been granted assistance from
government to the tune of Rs. 5220/- crore and 65% thereof has
been disbursed. In addition to this the Public Financial
InstitutionslFinancial companies have restructured the liabilities
towards IFCI. It is alleged that If'Cl has treated these assistance as
income and part of profits. In this regards please state how AS-l2
has been complied with? Please also furnish a year wise list of
loans restructured liabilities by each of Public Financial Institutes.
and Financial Companies and accounting treatment thereof in the
last 5 financial years.
13. Ruthless Extravagant experience etc. It is alleged that IFe1 has
ruthlessly been indulging expenditure sanctioning loans. settling
"one time settlement" of loans accounts etc without due diligence
and proper appraisal. In this regard please submit:
a. List of all "one time settlement" of loan accounts in the last two
financial years ending 31.03.2009 indicating the date of
settlement and the date of authority of the BOD or CEO or ED
which ever is applicable.
1956.
two financial years.
e. Copies of declarations filled by the directors in compliance with
the provisions of section 307 and 308 of the Companies Act.
copies of Form 24A filed by each of the directors in the Las:
your company are interested as directors, partners etc. Submit
d. Names of all those companies and firms in which directors of
c. Copies of all approvals applied and taken under the companies
Act in the last three financial years ending 31.03.2009.
years with relationship inter-se.
general Public.
b. List of past and present directors of the company for the last 5
Foreign 'financial Institutions, central or state government and
companies etc. (furnish their names also) Bankers. Indian and
three AGM's indicating the shares held by the directors, group
a. Shareholding pattern of the company as at the date of the last
to the following points:-
14. Please furnish the further information/expenditure with regard
required and taken in each of the above cases.
who sanctioned such expenditure.
d. Indicate separately if any approval from the Government was
short-listed of vendors and grant of contracts and the authority
incurred by the company indicating the procedure followed for
Rs. 10 lakh each in the last two financial years sanctioned and
c. List of all major renovations and expenditure above the limits of
by the Board or any other authority to be indicated.
also the sanctioning of expenditure in each head as delegated
IFCI can sanction "one time settlement of loan accounts and
b. The limits up to which CEO or the ED or any of the officers in
,~~ tV::: / t,C··J •
.J ''_' "-\.. '
NCT of Delhi & Haryana
Deputy Registrar of Companies
(G.K. Gupta)
Sd -
default for action under section 24(4) of the Companies ACL 1956.
accordingly in addition to the liability of the company and its officers in
have nothing to say in the matter and the report shall be submitted,/
....:
no reply is received within the given time, it shall be presumed that YOu
that no extension of time to submit your reply shall be entertained and if
r
submitted to the Lok Sabha Secretariat within the given time. Please note
Please treat it as most urgent and time bound matter as a report is to be
above given email address.
Please also submit one soft copy of the reply on CD or by email on the
can reduced capital held by particular investor.
held by LlC only. Please offer your comments how company
h. Company has passed special resolution for reduction of capital
schedule XIII of the Companies Act. 1956?
company has compiled with the provisions of section 269 r/w
no WTD or MD in between this period. Please state how the
(S.K. Mandal) was appointed as WTD on 1.11.2008. There was
company on 10.07.2007. Thereafter, Shri Sujit Kumar MandaI
Shri Rajender Mohan MalIa ceased to be the WTD of the
g. As per the documents filled by the company with this office
with this office.
f. Dates and SRN of all the DIN3 forms filled by the company
official carrier as Director in the Ministry of Finance. Accord.ncy Iii l;:e
states, if he had any dealing with IFCI during the last three years of his
taking up post retirement commercial employment and vvas required to
required to apply for Government approval in the prescribed from nO.25for
As per Rule 10(1) of the CCS (Pension) Rules. Shri Rai was
Nehru Place, New Delhi-110019.
Public Financial Institution having its registered Office at IFCI Tower. 61-
Director (WTD) - of IFCI Limited, (the then highest position in IFC), a
Ministry of Finance, to get himself appointed to the post of VVho:eTime
suppression of FACTS by Shri Atul Kumar Rai. a former Director in the
Your kind attention is drawn to the gross mis-representation and
Director in IFCI or; FALSE Mandatory DECLARATION
Sub: Appointment obtained by Shri Atul Kumar Rai as V'Jhole Time
Respected Sir,
f'.¬ wDelhi-11000 1
North Block
Government of India
Ministry of Finance
Deparbnent of Economic Affairs
Secretary
Shri Ashok Chawla
No.AIIFCEAl2009-7 to 10
CONFIDENTIAL
BY SPEED POST
Shahdara, Delhi-110032
Correspondence Address: C/o M-202 Anupam Apartment, East Arjun Nagar
ANt0~'iug_(.:_ - e:~~-,ALL INDIA INDUSTRIAL FINANCE CORPORATION
EMPLOYEES' ASSOCIATION
, ,I
towards Public Sector Banks/Financial Institutions and Insurance
Institutions, other legislative and administrative work relating to IFCI
possible merger with a PSU Bank. restructuring of :Fe! s liabilities
IFCI, exploring various options by the Central Govt. tor
restructuring of IFCI by way of induction of a strategic partner i:s
sanction/disbursement of loans and grants by Govt. of India to
responsibilities, Shri Rai was looking after issues relating to tr.e
Among othe:Services, Ministry of Finance, New Delhi
DIRECTOR (Industrial Finance) in the Department of Financial
CEO & MD w.e.f. ii" July, 2007). Shri Rai was posted as
Director{WTD) w.eJ. 15t June. 2007 (and later :edesigr,ated as
(ii) Till the date of his appointment in IFCI as '/Vh:le T~:;:e
the period.
known of all 'privy' to all 'sensitive or strategic information's during
Director on the Board of IFCI Shri Rai was obviously in absolute
taking up the post of Whole Time Director (\lVTO) in !FC!. As a
Government Nominee, which position he held upto a day prior to
already a DIRECTOR on the Board of IFCI as a Central
5th Feb.,2007 and 30th April, 2007, respectively. Shri Atul Rai was
permission to take up the said post in IFCI after retirement. on the
from Finance Ministry's service and asking fer Government
(i) At the time of moving his request for seeking voluntary retirement
considered:-
suppression of material facts in as much as the following facts are
The above declaration is a gross misrepresentation and amounts to
areas in which I propose to practice or consult".
interest or work of the organization that I propose to join or to the
three years of service, which is directly related to the areas of
"(b) I have not been privy to sensitive or strategic information in the last
Annexure-I), inter-alia, he submitted as under :-
said Mandatory Declaration dated the 31s: May, 2007 (CO::lY enclosed as
,'" ','..
further from the following instances:-
IFCI during in service in Finance Ministry could wei! be ga~gej
access to each and every secret and sensitive information's about
(vii) How deeply Shri Rai was involved in the affairs of IFel and had
candidates ere interviewed and both f them were appointed ::1 If=C!
Committee and Interview Board was also constituted anc
Director in IFCI, proper advertisement was issued, Search
of Shri V.P. Singh, ex-CMD and Shri R.M. Malia. ex-Executive
officer in the Ministry of Finance. Earlier, at the time of appomtrnen:
as Director in the Board of IFCI and his close relations ',',titha sen-or
advertisement in News paper for the post, thanks to his influence
(vi) Deviating from earlier practice, he successfully stripped any
many times higher than he was drawing in the Finance r..,·1inistry,
Rai foresaw lucrative future in IFCI at a compensation package
infusion and massive bail-out packaqe by Government of India, Shri
(v) It appears that after taking into account the benefits of capital
owing towards PSU Banksl Financial Institutions etc.
view of the Govt. Bail-out Package and restructuring of its iiabilities
operation, administrative activities and future viability especially i~
complete insight of the affairs of IFCI - its financiai health
planning of the Government towards revival of IFCI but nao
including full knowledge of not only about the approach and
Shri Rai had been in 'privy to all sensitive and strategic information'
Director in the Board of IFCI and Director in the Ministry of Finance.
(iv) Thus having occupied the strategic dual position of the Nominee
relevant pages are enclosed as Annexure-II & III).
for the years 2005-06 and 2006-07 respectively (copies of the
CEO & MD of IFCI has been reported in the Annual Reports of IFCI
(iii) His appointment as Government Nominee Director and later as the
his appointment in IFC!.
etc. for a period of about four and half years, immediately preceding
, ,\ .','-'_
\ \...
l, ,_~_.-,.....
(viii) It is also quite intriguing to note that despite being fully aware of the
dual position of Shri Atul Rai, the above violations have taken place
promoted by IFCI).
disinvestment of IFCl's stake in ICRA (a credit rating agency
principle' approval of the Government of India regardin:;;
9-2005 (Annexure-VII) addressed by Shri Atul Kumar Rai. as
Director (IF) to Shri R.M. Malia, the then CEO, IFCI conveying 'in
(d) D.O. letter No.2(3)/2005-IF.1 dated 21s: September. 2005 dated 2~-
of the synergy of the merger.
Board of Directors for favourable action. bringing out the acvaruaqe
the issue of merger of IFel with Punjab Nationai Bank witn :'<e
IF-I) to Shri V.P. Singh, the then CMD of IFCI advising him to take
(Annexure-VI) addressed by Shri Atul Kumar Rai, as Director (EA &
(c) 0.0. letter No,.2116/2002-IF-1 Part dated 29:" January. 2004
crore as grant to IFe!.
the matter regarding treating the balance assistance of Rs.4.697
schedule of release of funds by Government and consideration of
over certain liabilities of IFel by Government, advising about tr.e
addressed to Shri RM Malia, the then ED. IFCI confirming tak:::g
July 2003
(Annexure-V) from Shri Atul Kumar Rai as Director (Eft. & W-i
D.O. letter No. F.No.2/16/2002-IF-1 dated 22nd(b)
liabilities of IFel.
Ri was closely associated with the exercise of restructuring 07
'0'/6% and extending period of maturity to as long as 20 years. Shri
restructuring of liabilities by way of reduction of interest rate to
Banks and Financiaillnsurance Institutions for giving effect to the
2002 and z= December, 2002 were forwarded to Heads of the PSU
Director (EA & IF-I) along with which minutes of the meetings of
stakeholders of lOBI and IFel held in New Delhi on 26th November.
enclosed as Annexure-IV) signed by Shri Atul Kumar Rai. as
(a) Letter F.No.2(16)IIF-I/2002 dated 24th December 2002, (copy
Sd.-
Yours fatthfuli~l
Committee of the Association
employment in IFC!. This has the unanimous approval of Managir,g
facts and submission of false declaration for getting post retirement
effect and legal actions should be initiated against him for suppression of
Kumar Rai be removed from the post of CEO & MD of IFCI with immediate
It is requested that the matter may be examined early and Shri Aw~
If necessary this matter may be got examined by Leal Advisor also
relatives of Mr. Rai who happen to be in important government positions
ensure that Ministry does not succumb to the out side influence of certain
was directly related to the areas of interest or work of IFe!. Sir please
sensitive or strategic information in the last 3 years of his service which
Declaration' in as much as he has submitted that he was "not privy to
has, then, committed a act of perjury for giving false 'Mandatory
From the foregoing, it may be observed that Shri Atul Kumar !Rai
with false submissions and needs to be investigated.
(x) This fact alone will speak volumes as to how Shri Atul Rai got av"ay
declaration.
close relative by ignoring official procedure by submission o~ &a!se:
obvious reasons, thanks to his senior officer Shri Vinod Rai. his
lucrative terms and later jumped boundary and got into IFCI for
extending bail-out package and restructuring of package to IFel at
is now very clear while sitting at Govt. side he was involved in
Atul Rai, and under whom all the above mal-practices took place. It
of whom Shri Vinod Rai, then Secretary, was a close relative of Shri
extended by his senior in the Department of Financial Services, one
(ix) It is also a matter or probe if Shri Atul Rai had enjoyed the largesse
officer cannot be ruled out.
right under the Finance Ministry and the involvement of its senior
, I
DRS '.' a~
Sdt'-
For information and necesSaty acIio(\ ~.
Sansad Marg
New Delhi-110 001
Ministry of Finance
3m Floor, Jeevan Deep
-. Department of Financial Servicest
(Additional Charge)
Secretary (Finance)
New Delhi,1100Q.1
3. ShriAshokChawla
North Block
and Pension
Ministry of Personnel, Training, Public Gnevantes
Secretary
2. Shri Rahul Sarin
NewOelh i-110001
North Block
Government of India
Ministry of Finance
1. The Secretary
Encls: Annexure-I to VII
Joint Secretary
'r. _...,\0 ,-;I ',
(Dr. R.S. Tiwari)
· .
~
~'Gross Salarv '
CCA
Transport Allowance
Dearness Allowance
Deaness Pay
R_. ~' f.''..... I
Rs. 8.1:·8 ]
Rs. 8 ..:.~.:::• c_
Rs. -.....
Rs. :90
Rs. - ,--House Rent Allowance
Basic Pay
of Financial Sen' ices in ~v1ay.2007 are as under:
The particulars of salarv drawn bv Shri -\ru' Kumar R"': ::". r'l:-~'- ',~ IJ-"- '-"':"--'lr S .. '\. ~.. _ " 1 f\..~..~,;.._ _ •• .L-_.-:.. .. __ \".~ ~ ~.. ..:_ .
"dated i o- August. :('(19 1:\r1 the J.~,.)\ ~ ~'..:~~-:~':Please refer to vour letter
Sir.
Department f Financial Sen ices
Subject:
DELHI-I10 095
Vi\"ek Vihar
Jhilmil colony
I31-D LIG DDA Flats
Shri Suresh Kumar Gutam
To
(Establishment Section I
Department of Financial Sen ices
Ministry of Finance
Government of India
F.N 0 .2/i 0/2009- Estt
RTI r.1ATTERiSPEED POST
~~t..~,.~t;'-_ I
"
CPIO & Under Secretary to Government of India
(R.--\,\'L\;-'; KF\L-\R G.-\L"R..
Sd -
Yours faithful I: .
to Shri Atul Kumar Rai. Ex-Director.
3. Apart from the above pay and allowances. there were no perks admissible
revisions of pay scales in 2008.
towards arrears accrued to him for the month of May, 2007 on account of
2. An amount of Rs, 18,4101- was also paid to Shri Atul Rai subsequently
now occupying a Constitutional Post.
was then the Secretary (FS) in the Ministry of Finance, Govt. of India and
assisted and facilitated by one of his dose relatives. Shri Vinod Rai, who
Central Govt. permission for taking up the saki post of Whole Time
Director in IFel Ltd with effect from 1st June, 2007. In his task, he was
Director (IF-I) in the Ministry of Finance, Govt of India, and solicited
May, 2007, when he sought his voluntary retirement from the post of
Director, by giving a false declarationl affidavit to Govt. of India on the 31s,
Government official for taking up appointment in IFCI Ltd as Vvhole Time
of perjury committed by Shri Atul Kumar Rai, a high ranking Central
We seek your kind permission to bring to your notice a classic case
Respected Sir,
for his removal and prosecution
India for obtaining commercial employment in IFCI - Demand
Ltd by furnishing false mandatory declaration to Govt of
Sub: Perjury committed by Shri Atul Kumar Rai, CEO & MD, IFCI
New Delhi-110 001
North Block
Government of India
Hon'ble Finance Minisier
Shri Pranab Mukhe~ee
BY SPEED POST
Dated 12thOctober, 2009No.AIIFCEAl2009-36
Shahdara, Delhi-110032
Correspondence Address: C/o M-202 Anupam Apartment, East Arjun Nagar
ALL INDIA INDUSTRIAL FINANCE CORPORATION
EMPLOYEES' ASSOCIATION
,---:10
appointment. approval of Finance Minister is necessary. Secretary
post of Whole Time Director in IFCI Ltd is a commercia!
by Director (Admn). Ministry of Finance, mentioned that since the
(iv) Shri S.P.S. Sangwan. Under Secretary(Admn). Ministry of Finance
Govt. of India, in his note recorded on 14th May, 2009 and approved
Rules.
same after his voluntary retirement under Central Govt. Service
requested Govt. of India to accord permission for taking up the
had offered him the post of Whole Time Director and therefore
Public Financial Institution at their meeting held on 7't", March. 2007
Govt. mentioned that the Board of Director of IFCI Ltd., which is a
(iii) Shri Atul Kumar Rai, vide his note dated 30.04.07 submitted to
Director of IFCI Ltd.
and from 1st June. 2007. he started functioning as Whole Time
His voluntary retirement finally came into effect on 31st May, 2007
"for attending certain personal and family matters".
from the Central Govt. are as under :-
of service. The reasons for which he sought voluntary retirement
services of Govt. of India w.e.f. 28.02.07 after rendering 21 years
(ii) Shri Atul Kumar Rai applied for voluntary retirement fr40m the
of Finance. Govt. of India.
working then as Joint Secretary/Additional Secretary in the Ministry
IFCI. was held by one of his relative Shri Vinod Rai who was
post of nominee Director of Central Government on the Board of
Govt. of India. Prior to his appointment to Board of IFCI Ltd .. the
serving as Director (IF-I) I the Ministry of Finance. Govt of India.
He was also Director n the Board of IFCI Ltd as nominee of the
(i) Shri Atul Kumar Rai, an Indian Economic Service Officer was
Information Act. are as under:
the information obtained from the Ministry of Finance under Right to
2. The facts which gave rise to this episode and which are based on
--------------- -
as under in his notings on 21st May"07 :
Shri Atul Kumar Rai to take u the appointment in IFCI Ltd. records
while recommending to Finance Minister for grant of permission to
mentor, Shri Vinod Rai, the then Secretary (FS) Ministry of Finance.
suppressed is quite clear and obvious. Instead his guide and
suppressed in the said noting. Why and how this fact was
and other business affairs. Both the above facts were deliberately
Finance, actively involving in its restructuring. Government support
Annexure-II) and was dealing with IFel as Director in Ministry or
of Annual Report of IFel for the year 2006-06 enclosed a
IFel Ltd with effect from 21st August, 2005 (Copy of relevant page
that Shri Atul Kumar Rai was a nominee Director on the Board of
request till his date of release on 31SI May'07, nowhere mentions
Rai right from the date of his submission of his voluntary retirement
Finance dealing with the voluntary retirement of Shri Atul Kumar
(v) Notings recorded by the concerned officers of the Ministry of
declaration is enclosed as Annexure-I)
to areas in which I propose to practice or consult". (Copy of the
areas of interest of work of the organization that I propose to join or
in the last three years of service, which is directly related to the
"I have not been privy to sensitive and strategic information
to Govt. of India, mentioning inter-alia, that-
Minister. Shri Atul Kumar Rai gave declaration on 31st May, 2007
remarks, he recommended the matter for approval of Finance
information of IFel Ltd during the last 3 years. \Nith these
mentioning that he was not privy to sensitive and strategic
declaration in terms of DOPT Notification dated 26.11.2006,
mentioned that Shri Atul Kumar Rai has to give a mandatory
(Dept of Economics Affairs) vide his note dated 30l~ May'07:
already on the Board of IFCI ltd. w.e.f. 21st August, 2005 till the
last day f his Central Government employment i.e. 3f,t May, 2007.
strategic information of IFClltd. He concealed the fact that he was
the Govt. of India mentioning that he was not privy to sensitive or
(i) Shri Atul Kumar Rai gave willfully a wrong declaration/affidavit to
perjury and bad Governance:
3. This whole issue brings to surface the following acts of
Ministry of Finance, obtained under RTI Act is annexed as Annexure-III.
The relevant notings sheets of the Department of Financial Services
30.05.2007
Vlnod Rai
Sd/-
Banks & F/s."
a good tract record and has acquitted himself in handling policy issues of
Director on the Board f IFCI. The Officer is professio,?allycompetent has
"Approval of FM is sought for Shri Atul Kr Rai to join as VVholeTime
Rai, the then Secretary (FS), it is mentioned as under:
Vide subsequent notings dt. 30.0507 recorded by Shri Vinod
21st May,2007
Vinod Rai
Sd/-
professional competent & IFel Board sought his services".
join IFCI on his taking pre-mature release from the Govt. He is
"FM may consider granting permission to enable Shri Atul Rai to
kindly direct the concerned authority for removal of Shri Atul Kumar Rai
4. Therefore, through this letter we would request your Honour to
Public life.
ought not have done this since he was holding the post of
Secretary (FS) in Ministry of Finance at that time and was closely
related to Shri Atul Kumar Rai. This certainly goes against
upholding probity and highest traditions of Administrative ethics in
personally oversaw his elevation to the post of CEO of IFCI Ltd. He
advertisement/constituting any proper search committee and
of Shri Atul Kumar Rai as CEO of IFCI ltd without any public
the eyes of law. Moreover, Shri Vinod Rai, facilitated the elevation
Vinod Rai was totally unethical, administrative imprudent and bad in
as Whole Time Director of IFCI Ltd. This act on the part of Shri
patently wrong administrative act in recommending his appointment
(iv) As a close relative of Shri Atul Kumar Rai, Shri Vinod Rai made a
21.8.2005 till a day before Shri Atul Rai joining IFC!.
nominee Director on the Board of Directors of IFCI Ltd. w.e.f.
business affairs after his (Shri Vinod Rai) quilting the post of
Board of IFCI Ltd and was actively involved its restructuring and
Finance Minist5er that he was a nominee of Central Govt. on the
Director on the Board of IFCI Ltd. also concealed the facts from the
Vinod Rai, while recommending his appointment as whole time
(iii) The all concerned Government officials including his mentor, Shri
information of IFCI in the process.
was fully aware and exposed to all sensitive and confidential
Govt. support and other business affairs pertaining to IFCI and he
Director (F) he was incharge and involved in the restructuring,
(ii) Again during this period in the Ministry working on the post of
Encls: Annexure-I, II & III
General Secretary
(Madan Lal)
Sd/-
Yours faithfully.
With regards,
mandatory declaration for getting post retirement employment in IFCI.
initiated against him for suppression of facts and submission of false
from the services of IFCI with immediate effect and lega~action should be
~_...: (""---r=,'::»
\ \
I enclose a representation dated the 12thOctober. 2009 from the All India
Industrial Finance Corporation Employees' Association, Delhi addressed to you
pointing out the fraudulent and false Mandatory declaration signed b~ Shri Atu!
Kumar Rai on the basis of which he was subsequently appointed as the Whole
Time Director/CEO & MD of IFCI Ltd.
A perusal of the certified copies of the documentsINOTINGS obtained
from the concerned Division of the Finance Ministry. under RTI Act. confirms the
fraud and hence I have to observe th~ following :-
(i) The then Finance Minister, Shri P. Chidambaram while approving
Shri Atul Rai's appointment. stipulated a condition that Shri Rai
should submit the usual mandatory declaration;
(ii) Accordingly, Shri Atul Kumar Rai. submined the declaration
which, inter-alia, states as follows:-
Dear Shri Mukherjee Ji,
Sub: Fraudulent appointment obtained by Shri Atnl Kumar Rai as
WholeTime Director/CEO in IFCI on FALSEMandatory
Declaration.
Dated: 7.12.2009
SPEED POST
• Standing Committee on Ministry of Chemical & Fertilizers
• Consultative Committee on Rural Development & Panchayati Raj
• Committee on Welfare of Sche3duled castes/Scheduled Tribes
Member:
26, South Avenue
New Delhi-II 0011
Tel: 011-23795018
Mobile: 9868180441
VilllPost Shahpur Atria
Tehsil: Sandila
Disn Hardoi (UP)
ASHOK KCMAR (Rawat)
Member of Parliament
(Lok Sabha)
inquiry to avoid any scope of tempering of records and evidences etc.
should be disassociated from IFeI with immediate effect till the completion of the
high level inquiry is demanded to nab the culprits. Meanwhile, Shri Atul Raj
any way since the matter involves fraudulent declaration and blatant favoritism. a
Government, the appointment of Shri Atul Rai attracts automatic cancellation. In
Since the above facts are based on documentary proof obtained from the
Rai.
officers to suppress the said vital facts to favour Shri Atul Kumar
boss of Shri Atul Rai might have influenced his departmental
Secretary, Deptt of Financial Services & a close relative and the
(vii) There is reasonable cause to believe that Shri Vinod Rai. then
notings of the Finance Ministry for reasons bener knO\\TI to them:
(vi) This fact as at (v) above also stands suppressed in the relevant
Institutions in favour of IFeI etc.
package, getting soft investments from PSC Banks and Financial
restructuring/merger of IFeI, grant of Government financial
was the nodal officer dealing with the affairs of IFe! especially
Rai was the Director (IF) in the Dept of Banking Services and he
(v) Besides, available documents further speaks that Shri Atul Kumar
during the period;
suppressed the fact that Shri Atul Rai was in the Board of IFel
(iv) 1 also observe that the notings of the Finance Ministry also
immediately preceding his appointment:
the Board of Directors of IFeI w.e.f 21.8.2005 till 31.5.2007
documentslBalance sheet of IFeI shows that he was a member in
privy to sensitive information of IFeI for the last 3 years, the
(iii) It is interesting to note that while Shri Rai vouches that he was not
areas in which I propose to practice or consult".
interest of work of the organization that 1 propose to join or to the
last three years of service, which is directly related to the areas of
"I have not been privy to sensitive and strategic information in the
/
r >: 0" I..... ,-\ \ o....J
\IP LS
(Surender Singh Nagarfl
Sd -
North A\ enue
\{P 185
(Rarnashankar Raj bhar I
Sd-
M.P /LS - -l6~
(Arvind Kumar Choudhary)
Sd -
(Ashok Kumar (Rawat)
Sd, -
Yours sincerely.
,.....
\~"~\ \
Enel: As stated
New Delhi-l10 001
North Block
Government of India
Hon'ble Finance Minister
Shri Pranab Mukherjee
With regards,
Civil Line. Unnao (L'P) Tel: 0': 15-1S'L500
C-Il4 Humayn Road. New Delhi-lID 003 Tel: 011-23795000
documentslBaJance sheet ofIFCI shows that he was a member in
privy to sensitive information of IFCI for the last 3 years. the
(iii) It is interesting to note that while Shri Rai vouches that he was not
areas in which Ipropose to practice or consult".
interest of work of the organization that Ipropose to join or to the
last three years of service, which is directly related to the areas of
"I have not been privy to sensitive and strategic information in the
which, inter-alia, states as follows>
(ii) Accordingly, Shri Atul Kumar Rai. submined the declaration
should submit the usual mandatory declaration;
Shri Atul Rai's appointment, stipulated a condition that Shri Rai
(i) The then Finance Minister, Shri P. Chidambaram while approving
fraud and hence Ihave to observe the following :-
from the concerned Division of the Finance Ministry, under RTI Act. confirms the
A perusal of the certified copies of the documents. NOTINGS obtained
Time Director/CEO & MD of IFCI Ltd.
Kumar Rai on the basis of which he was subsequently appointed as the \\ 'hole
pointing out the fraudulent and false Mandatory declaration signed by Shri Atul
Industrial Finance Corporation Employees' Association, Delhi addressed to you
I enclose a representation dated the 12thOctober. 2009 from the All India
Declaration.
Whole Time Director/CEO in IFeI on FALSE Mandatory
Sub: Fraudulent appointment obtained by Shri Atul Kumar Rai as
Dear Shri Mukherjee Ji,
Dated: 7.12.2009
(Deputy Leader B S P Parliamentary Party)
AN tJE/(\JK~~ P 2-<?-Brajesh Pathak, lUP
With regards,
Since the above facts are based on documentary proof obtained from the
Government, the appointment of Shri Atul Rai attracts automatic cancellation. In
any way since the matter involves fraudulent declaration and blatant favoritism. a
high level inquiry is demanded to nab the culprits. Meanwhile, Shri Atul Rai
should be disassociated from IFCI with immediate effect till the completion of the
inquiry to avoid any scope oftempering of records and evidences etc.
the Board of Directors of IFCI w.e.f. 21.8.2005 till 3) .5.2007
immediately preceding his appointment;
(iv) I also observe that the notings of the Finance Ministry also
suppressed the fact that Shri Atul Rai was in the Board of IFCI
during the period;
(v) Besides, available documents further speaks that Shri Atul Kumar
Rai was the Director (IF) in the Dept of Banking Sen-ices and he
was the nodal officer dealing with the affairs of IFCI especially
restructuring/merger of IFCI, grant of Government financial
package, getting soft investments from PSU Banks and Financial
Institutions in favour of IFCI etc.
(vi) This fact as at (v) above also stands suppressed in the relev ant
notings of the Finance Ministry for reasons better known to them:
(vii) There is reasonable cause to believe that Shri Vinod Rai, then
Secretary, Deptt of Financial Services & a close relati \ e and the
boss of Shri Atul Rai might have influenced his departmental
officers to suppress the said vital facts to favour Shri Arul Kumar
Rai.
-.
/---.---fI 4 1 !,- /' '" r-' .I : ,,--~,,~ ,:_,r-' J<.
Encl: As stated
New Delhi-l 10 001
North Block
Government of India
Hon'ble Finance Minister
Shri Pranab Mukherjee
(Brajesh Pathak)
Sd -
Yours sincerely.
has purchased the share at such inflated rate ofRs.35 instead of Rs.l O !
the face of such a mandatory stipulation it is beyond imagination as to how IFCI
private exchange lie MCX-SX to allot 5% stake to any Financial Institution. In
It may also be noted that as per SEBI Guidelines. it is mandator: for an:.
are not being quoted in any of the recognized stock exchanges.
much higher price, just in a span of about six weeks. particularly when the shares
when the IFCI Mgtt has purchased -% stake in MCX g RS.35'- per shares on
up 6.68% stake of MCX-SX from Financial Technologies @ Rs.l Or-rn per share
in June, 2009, Union Bank of India (UBI) and Bank of India (B01) have picked
telecast on the 2200 August, 2009, on CNBC-TV 18 channel, it was reported that
Technologies in July, 2009 and the total cost involved was Rs.236 crores. In a
Ltd. (IFCI Ltd) on much higher price @ Rs.35!- per share from Financial
5% stake in MCX by the Management of Industrial Finance Corporation of India
Association, Delhi addressed to you pointing out fraud/corruption in purchase of
October, 2009 of the All India Industrial Finance Corporation Employees'
Please find enclosed herewith a copy of the representation dated 21>,
fraud of more than Rs.lS0 crores of public money
Management on Much Higher Price @ Rs35/- per shares - Smacks
take inMCX-SX (unlisted company) by If'ClSub:
Dear Shri Mukherjee Ji,
Dated: 7.12.2009
• Committee on Welfare of Sche3duled Castes/Scheduled Tribes
• Consultative Committee on Rural Development & Panchayati Raj
• Standing Committee on Ministry of Chemical & Fertilizers
Member:
Mobile: 9868180441
Tel: 011-23795018(Lok Sabha)
New Delhi-llOOllMember of Parliament
26, South AvenueASHOK KUMAR (Rawat)
Encl: As stated
New Delhi-II 0 00 I
North Block
Government of India
Hon 'ble Finance Minister
Sbri Pranab Mukherjee
(Ashok Kmruu(Rawat)
Sd/-
Yours sincerely.
With regards,
concerned authority t~ take immediate remedial action and advise me the position.
I shall be obliged if you will kindly look into the matter and direct the
public money.
Iobserve that it is a clear-cut case of fraud of more than Rs.150 crores of
arrived at by If'Cl against Rs.lOI- per share acquired by UBI & BOL
question of the basis on which the said valuation of Rs.35/- per share had been
Joint Secretary and Sanjeev Kumar Jindal, Deputy Secretary have raised the
The, GOl's Nominee Directors on the Board of IFCI, S/Shri K.V. Eapen,
New Delhi-110011
South Block
Govt. of India
Prime Minister
Dr. Manmohan Singh ji
(Narayan Singh Kesri)
Wrth regards,
episode.
I hope that you will take appropriate action after investigating the above
Ltd. in the purchase of shares of MCX.
Union has complained against the irregularities by the management of IFel
Finance Corporation of India Employees Union wherein the Employees
Respected Dr. Manmohan Singh
I enclose a copy of the report dated 21.10.2009 of All India Industrial
17 December, 2009
Member of Parliament
I rJ I_",- , ,c-.::, ......;_
I
Narayan Singh Kesri
Dr. Manmohan Singh ji
Prime Minister
Government of India
South Block
New Delhi-110011
Yours
Sd/
(Narayan Singh Kesli)
I, therefore, hope that you will take appropriate action after
investigating the matter.
With regards,
Respected Dr. Manmohan Singh ji
I enclose a copy of a report by All India Industrial Finance Corporation
of India Employees Union dated 12.10.2009 with this letter wherein they
have reported how Shri Atul Kumar Rai annexed the post of Chief Executive
Officer and Managing Director in Industrial Finance Corporation of India by
submitting a false mandatory declaration and demanded removal of Shri Rai
from the position and a legal action against him. Certified documents
obtained under the Right to Information have also been attached w1th the
report.
Date: 18.12.2009
Narayan Singh Kesri
Member of Parliament
the Right to Information have also been attached with the report.
position and a legal action against him. Certified documents obtained under
false mandatory declaration and demanded removal of Shri Raj from the
Managing Director in Industrial Finance Corporation of India by submitting a
Shri Atul Kumar Rai annexed the post of Chief Executive Officer and
Employees Union dated 12.10.2009 wherein they have given details of how
I enclose a report by AJI India Industrial Finance Corporation of India
Kumar Rai by submitting false mandatory declaration - reg.
Director in Industrial Finance Corporation of India by Shri Atul
Subject: Annexing the post of Chief Executive Officer and Managing
Respected Prime Minister ji
Date: 18.12.2009
Phone: 07532-222621
PIN: 476110
Muraina (MP)
Argal House, Dattpura.
Phone: 011-23359238
New Delhi-110001
4, Firozeshah Road
- Joint Committee on Offices of Profit
- Parliamentary Consultative Committee on Civil Aviation
- Parliamentary Committee on Human Resource Development
Member
(Lok Sabha)
Member of Parliament
Ashok ArgaJ
Dr. Manmohan Singh ji
Prime Minister
Government of India
South Block
New Delhi-110001
Encl: a.a.
Sd/
(Ashok ArgaJ)
Yours
With regards,
I, therefore, hope that you will direct the concerned rrumst-y/central
investigative agency to investigate the above matter and take lecessary
action.
price which the Employee Union has detailed in its report.
Board of Directors have also questioned the purchase of shares on high
and Sanjiv Kumar Jindal, Deputy Director, Governments' nominees on the
of a scam to the tune of Rs.165 crore. Sarvashree K. V. Eapen, Joint Director
this, IFCI made a payment of Rs.236 erore. In this deal, there are indications
Union Bank of India and Bank of India at the rate of Rs.10/- per share. For
per share whereas the shares of the same company were purchased by
Employees Union dated 21.10.2009 wherein they have reported that MCX
SX shares were purchased by the IFCI management at the rate of Rs.35/-
I enclose a report by All India Industrial Finance Corporation of India
management - reg.
Subject: Irregularities in the purchase of MCX-SX shares by IFel
Respected Prime Minister ji
Date: 18.12.2009
Phone: 07532-222621
PIN: 476110
Argal House, Dattpura,
Muraina (MP)
Phone: 011-23359238
New Delhi-110001
4, Firozeshah Road
- Joint Committee on Offices of Profit
- Parliamentary Consultative Committee on Civil Aviation
- Partiamentary Committee on Human Resource Development
Member
(lok Sabha)
Member of Partiament
AshokArgal
Encl: a.a.
New Delhi-110001
South Block
Government of India
Prime Minister
Dr. Manmohan Singh ji
(Asnok Argal)
Sd/-
Yours
With regards,
prevention of corruption law after instituting inquiry into the matter.
ministry/central investigative agency to take necessary action under
I, therefore, hope that you will issue directions to the concerned
.......I ,.... _
Director
(Panavi Jain Govil)
Sd/-
ii. Finance Secretary
i. Secretary, Department of Consumer Affairs
appropriate to:
Copy, with a copy of the letter under repty forwarded for action as
January 04,2010NO.260131/C/112010-IES.1
Indore, Madhya Pradesh.
29314,M.G. Road,
Member of Parliament
Shri Narayan Singh Kesri
(Manmohan Singh)
SdI-
Yours
With good wishes,
Union are enclosed.
representations from All India Industrial finance Corporation Employees
Received your two letters dated 17 December, 2009 with which
Dear Shri Kesri
22 December, 2009
New Delhi
r ~"! IL
Af\IN~Y()Rf - P·32-Prime Minister
(Virendra Kashyap)
Sd/-
Copy sent to: Shri Madan La', for information
New Delhi
Hon'. Prime Minister
Dr. Manmohan Singh
(Virendra Kashyap)
Sd/-
Yours
With regards and good wishes,
matter.
the post of Chief Executive Officer and Managing Director in Industrial
Finance Corporation of India by submitting a false mandatory declaration.
The union has demanded sacking of Shri Rai from the position, investigating
the manner through which he annexed the position of responsibility and
taking stem action against those responsible for the episode. My request is
to kindly direct all concerned to take appropriate action in view of the
seriousness of the episode and kindly apprise me of the action taken in the
General Secretary, All India Industrial Finance Corporation of India
Employees Union, M-202, Anupam Apartment, East Arjun Nagar, Shahdara
dated 12.10.2009 which Villi make it clear how Shri Atul Kumar Rai annexed
Respected Dr. Manmohan Singh ji
Kindly peruse the photocopy of the representation of Shri Madan Lal,
Tel No. 011-23093228. Mob. NO.9013180063
D.O.L. No.06-2009-23. Dated 23-12-2009
217, North Avenue. New Delhi-110001
Date: 24/12109
lj1MEMBER OF PARLIAMENT
(LOK SABHA)
Virender Kashyap
New Delhi
Hon'ble Prime Minister
Dr. Manmohan Singh
(Virendra Kashyap)
Sd/-
Yours
With regards and good wishes,
in the matter.
prevention of corruption law and I may kindly be apprised of the action taken
manner in the matter, all concerned are directed to penalize the guilty under
My request is that an investigation is carried out in a reasonable
have been given in the report of the Employee Union.
sought clarifications on the purchase of shares on high price details of which
Deputy Director, Governments' nominees on the board of Directors have also
crore. Sarvashree K. V. Eapen, Joint Director and Sanjiv Kumar Jindal,
this deal there are indications of a corruption/scam to the tune of RS.165
at the rate of Rs.1 01- per share. A sum of Rs.236 crore was paid by IFCI. In
Bank of India and Bank of India purchased the shares of the same company
purchased MCX-SX shares at the rate of RS.35/- per share whereas Union
dated 21.10.2009 which will make it clear that the IFCI management
Employees Union, M-202, Anupam Apartment, East Arjun Nagar, Shahdara
General Secretary, All India Industrial Finance Corporation of India
KindJy peruse the photocopy of the representation of Shri Madan Lal,
Respected Dr. Manmohan Singh ji
Tel No. 011-23093228, Mob. NO.9013180063
D.O.L. No.06-2009-23, Dated 23-12-2000
217, North Avenue, New Delhi-110001
Date: 26/12/09
(LOK SABHA)
MEMBER OF PARLIAMENT
Virender Kashyap
Director
(Pallavi Jain Govil)
Sd/-
Department of Financial Services for action as appropriate.
Copy, with a copy of the letter under reply forwarded to the Secretary,
Dated 06.01.10No.260/681C/1/10-ES.1
Murama. Madhya Pradesh.
Argal Shavano Dattpura
Member of Parliament
Shri Ashok Argal
(Manmohan Singh)
SdI-
Yours
Dear Shri Argaf
Received your letter dated 18 December, 2009 with which a
representation from All lndia Industrial finance Corporation Employees Union
is endQsed.
30 December, 2009
New Delhi
,~~..
At\f~r;?((Jetf - P3~Prime Minister
Director
(Pallavi Jain Govil)
SdI-
Departnient of Financial Services for action as appropriate.
Copy, with a copy of the letter under reply forwarded to the Secretary,
Dated 08.01.10NO.26OI68Ic/1/1O-ES. I
Himachal Pradesh
The Mall. Solan
Doulat Niwas, Gupta Lodge
Member of Parliament
Shr Virendra Kashyap
(Manmohan Singh)
SdI-
Yours
Witt good wishes,
Received your two letters dated 24 and 26 December, 2009 with which
representations from ft1e ~I Secretary, All India Industrial finance
Corporation Employees Union, Shahdara, Delhi are enclosed.
1 January, 2010
New Delhi
Prime Minister
Director
(Pallavi Jain Govil)
Sd/-
Deparbnent of Financial Services for action as appropriate.
Copy, with a copy of the letter under reply forwarded to the Secretary,
Dated 08.01.10NO.26OI68ICl111 O-ES.I
Muraina, Madhya Pradesh.
Argal Bhavan. Dattpura
Member of Parliament
Shn Ashok Argal
(Manmohan Singh)
SdI-
Yours
With good wishes
isendosed.
~r Shri ArgaJ
Received your letter dated 18 December, 2009 with which a
representation from AM It1dia Industria.1 finance Corporation Employees Union
1 January. 2010
New Delhi
A~\JEWRe - P~6Prime Minister J4r-
as cesred. •
voluntary retirement from service under Rule 48A is annexed is enclosed
Madam.
Please refer to your letter dated 04.12.2009 addressed to CPIO of this
Department on the above subject and to provide you the information available
with this Department as under:
t i) These appears to no Advertisement issued by IFCI Ltd. for the post.
Hence copy of the such advertisement is not available in this Department.
Shri Rai had vide his note dated 30.4.2007 intimated to Administration of
Department of Financial Services that the Board of IFCI Ltd offered the
post of Whole Time Director.
(ii) This Department did not forward any application of Shri Rai to If'Cl, In
view of the above facts (2) does not arise.
(iii) A certified copy of Shri Rai's application dated 5/2/2007 seeking
Application from Smt. Savita Anand Q.No.938, Sector-I 2, R.K.
Puram,New Delhi seeking information under RTI Act, 2005
Subject:
Q.~o_938. Sector-I 2,
R.K. Puram.
~ew Delhi-II 0022
Smt. Savita Anand,
To
Department of Financial Services
Jeevan Deep Building, 3Td Floor
Parliament Street, New Delhi
Dated January 13,2010
Ministry of Finance
Government of India
AtfN'E,)(U~E'- P3:tF.No.20/24/2009-IF.I
".
Yours faithfully,
SdJ-
(Dr. Harmeet Singh)
CPIO Ph No.23 748767
The name. address and phone number of Appellate Authority (Department
':-1: Financial Services). Ministry of Finance is given below :-
Shri Sanjeev Kumar Jindal. Appellate Authority, Ministry of Finance,
Departrnent of Financial Services. Jeevan Deep Building, 3rd Floor, Parliament
Street. \'e'." Delhi-l l O 001 - Tel: 237.+8726
\ Iember of Parliament
26. South Avenue
~e\\· Delhi-l 10 011
Shro Ashok KUI:1ar(Rawatj
(Pranab Mukerhjee)
Sd/-
Yours sincerely.
\\·ith regards.
I 3.1.1 hJ\'ing the matter looked into
I am In receipt of you! letter dated December 7. 2009 forwarding
:i:ercwith a representation from All India Industrial Finance Corporation
Employees' Association, Delhi pointing out the fraud in purchase of 5% stake in
\lCX-SX by the ~1anagement of Industrial Finance Corporation oflndia Ltd.
Dear Shri Ashok Kumar.
DY.No. 324 FMNIP/20 I0
FINANCE MINISTER
INDIA
NEW DELHI-I 10001
20 JAN 2010
year - Rm'; Sumald & Aaron Rodrigues
December 2009 comparfed to Rs.13.50 crore for the corresponding period last
The company incurred a net loss of Rs.I0.90 crore for the quarter ended
Stock Exchange ~BSE), Morepen Laboratories had a total debt of'Rs.757 crore.
or. the RBI's "willful defaulters' Jist. According to the filing with the Bombay
received a certificate from its statutory auditors saying that Mr. Suri is no longer
hotelier can honour the past debt. The IFCI official claims that the company has
Rs.! 0 crore to the total amount sanctioned for Blue Coast Hotels so that the
raised many eyebrows in IFCI corridors as well. rFCI has also decided to add
The entire process of sanctioning the loan took less than 10 days and has
0.370.,'0 stake in Blue Coast Hotels and 1.22% stake in Morepen Laboratories Ltd.
still to pa. money to many depositrs. As of December 2009, Mr. Sun owned
Laboratories which had gone bankrupt and is now in a restructuring mode. It has
official frem IFCl. Sushi I Suri is the chairman and managing director of Morepen
Blue Coast still owes Rs.IO crore to the State-run financier, admitted a company
SUfi. a prominent name on the willful defaulters list of the Reserve Bank of India.
Icidentally. Blue Coast Hotels & Resorts is a group company of Sushi I
erlier knO\\11 as Morepen Hotels Ltd.
has sanctioned a whopping RS.225 crore loan to this hotel. Blue Coast Hotels was
em grants from the Indian Government and is undergoing a massive restructuring
;';n0wn as Blue Coast Hotels & Resorts Ltd. lFC!. which itself has been running
Take the recent case of If Cl Ltd. funding Blue Coast Hotels Ltd, formerly
entitles.
:O:!I1S. such businessmen can still get funded - that too by a government-owned
:~ere are now very strict laws co nab promoters and companies if they run up bad
In India. large defaulters can still get away quite easily. Despite the fact
More Pai - IFeI forks out Rs.22S crore to a 'wilful defaulter'!
CORPOR..-\IE LE~Dl?\G
~ ~}~rX'oe_f''-P3j11 March 2010Moneylife
why he is in need of meeting so many lawyers even in the state of his alleged
Satyam special court on Tuesday directed Raju to file a reply within six days as to
Permitting advocates to meet Satyam founder B. Ramalinga Raju in Nims, the
Lawyers can meet Raju: Court
scam are now seized of the matter.
Both the CBI and Enforcement Directorate which are probing the Satyam
Srinivas, IFCI's assistant general manager (legal) at the Hyderabad office.
pertaining to the Medchal land for sanctioning the loan were processed by one S
Raju got the loan from their Mumbai office. According to the sources, the papers
lFCI officials are now feigning ignorance about the issue and are maintaining that
work though the actual loan came from its Mumbai office. But the Hyderabad
The Hyderabad office of IFCI processed the papers and facilitated the
:,
his clout at the last minute and struck the deal with IFCI", said the sources.
DSP Merilll.ynch could have discovered the state of affairs in Satyam, Raju used
after his attempt to merge Maytas with Satyam failed. After apprehending that
Finciry Investments for pledging the shares and the land. "He was in a great hurry
Sources said Raju used his front companies like Ellem investments and
virtually rendered the shares and land pledged by Raju with IFCI, worthless.
to his crime. The value of his shares came crushing to rock bottom level and
He secured the money by January 4. 2009, and three days later, confessed
land situated in Nagloor village near Medchal in Ranga Reddy district.
crore after pledging 10 lakh shares each of Satyam and Maytas and 72 acres of
sector Industrial Finance Corporation of India (IFCI) by borrowing a Ion of Rs.85
Raju confessed to this crime, he dug a huge hole into the finances of the public
Hyderabad: Barely 72 hours before Satyam computers founder B. Ramalinga
\" Sagar Kumar/rsx
RAJU dug hole in IFCI too
06-04-2010
HYDERA.BAD EDITION
LaoTI~1ES OF INDIA
- f4-0
(~P'i 1/
(,Q.;ectionraised by CBI about the visitors. Th'1'
:,ad stopped allowing visitors in the hospital to meet Raju ever since the recent
maoe this order after hearing Rajus counsel who told the court that the authorities
:"cct him in the hospital would also continue. Special Judge BVLN Chakravarthy
acute ill health. The courts permission given earlier for Raju's wife and son to1-0\
was working as Director in the DFS from November, 2002 to 31st May,2007. The
request of Shri Rai for seeking VRS from Government Service was processed
under relevant Rules after taking necessary cadre clearance from his Cadre
Controlling Authority i.e.. Department of Economic Affairs. The Government
had accepted the VRS request of Shri Rai with the approval of the then Finance
\1inister on 30th May. 2007 and he was relieved on 3151 May, 2007 after he had
submitted the mandatory declaration. In his declaration Shri Rai had inter-alia
stated that he had not been privy to sensitive or strategic information in the last
three years of service, which was directly related to the areas of interest or work
of the organization that he proposed to join or to the areas in which he proposed to
practice or consult.
3. I have been informed that during his tenure in the Department of Financial
Services. Shri Rai had dealt with matters pertaining to IFCI requiring Government
interface. Further during the period from 21.8.2005 to 31.5.2007 he was on the
Board of IFCI Limited as a nominee Director and in that capacity, he was privy to
all Board level matters of IFCI Limited.
-L On a reference made by the Ministry seeking the comments of Shri A.K.
Rai, MD & CEO, IFCI Limited on the issue of mandatory declaration submitted
Shri Ami Kumar Rai, who belonged to Indian Economic Service Cadre
Dear Shri Kumar.
Please refer to your letter dated the 7m December, 2009 addressed to the
Han'ble Finance Minister regarding appointment of Shri Atul Kumar Rai as
\}.'hole Time Director/CEO in IFCI Limited.
19 MAY 2010D.O. No.I :43l2009-stt(PartFile
MINISTER OF STATE FOR FINANCE
(EXPENDITURE & FINANCIAL SERVICES)
GOVERNMENT OF INDIA
NEW DELHI
:\A~IO ~ARAI~ MEENA
New Delhi-II 000 I
26. South Avenue
Member of Parliament
Shri Ashok Kumar (Rawat)
(Namo Narain Meena)
Sd/-
Yours sincerely,
With regards,
6. I trust this clarifies the position.
lFCI Limited subsequent to his vohmtary retirement inMay, 2007.
Companies Act, 1956. It is an independent entity managed by its Board of
is staled that IFCI is not a Government Company and is registered under the
5. As regards the demand for his removal from the Board of IFCI Limited, it
Directors. Shri Rai has not been appointed by the Government on the Board of
As Director (IF) Sbri Rai was holding policy issues of Banks & FIs".4.2( -
Government of India and taking up the post of Whole Time Director in IFCI.
gwen by Shri Rai while seeking voluntary retirement from the service of
4.1 "The allegation of perjury is denied. No false declaration or affidavit was
has sent a reply conveying the following comments.
by him for seeking post-VRS commercial employment with IFCI Limited, IFCI
1. "....From the heart of all matter
3. Whether the judgment should be reported in Digest? YES BADAR DURREZ
AHMED, J
2. To be referred to the Reporter or not? YES
1. Whether Reporters of local papers may be allowed to see the judgment? YES
HON'BLE MS JUSTICE VEENA BIRBAL
HON'BLE MR JUSTICE BADAR DURREZ AHMED
CORAM:-
For the Respondent NO.2: Mr Yashpal Rangi with Mr Manjit Singh For the
Respondent NO.3: Mr A. S. Chandhiok, ASG with Mr Neeraj Chaudhari with Mr
Khalid Arshad, Ms Vibha Dhawan, Ms Madhur Panjwani and Mr Gurpreet Singh
Ms Alpana
For the Respondent No.1 : Mr N. K. Kaul and Mr Parag Tripathi, Sr Advocates
with Mr Suresh Dobhal, Mr Lokesh Bhola, Ms Ruchi Kohli and
For the Petitioner: Mr Amit Sibal with Mr Sachin Midha, Mr Jafar Alam, Mr Harsh
Koushik, Ms Ring Choden Lepcha and Ms Kriti Kumar
IFCI & ORS ... Respondents Advocates who appeared in this case:-
FINITE INFRATECH LTD ... Petitioner - versus-
Judgment delivered on: 09.07.2010 +WP(C) 709712008
THE HIGH COURT OF DELHI AT NEW DELHI
Delhi High Court
Finite Infratech Ltd vs Ifci & Ors on 9 July, 2010
Author: Badar Durrez Ahmed
2. But, what has all this got to d;owith this case? This will become clear, shortly.
This much is evident, conceptually speaking, that destruction need not be the
end alone; it may also be the beginning of something new. Here we are
concemed with the repeal of the Industrial Finance Corporation Act, 1948 and
the consequential death of the Industrial Finance Corporation of India
(hereinafter referred to as .the Corporation"), which was established under it, as
also the birth of the Industrial Finance Corporation of India Limited (hereinafter
referred to as "IFCI Limited"). The repeal was brought about by the Industrial
Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993. But, did
the repeal also, simultaneously, establish or constitute IFCI Limited as a new
form, a new "life" of the dead Corporation?
This is how the great Tagore saw the invocation of Lord Shiva"s attribute of
simultaneously being a destroyer and a creator. The destruction of the body
WP(C) 7097/2008 Page No.1 of 31 to enable the heart or soul to gain a new life
in a new form. Perhaps, this very principle of Hindu philosophy has been
borrowed by western thinkers and, ultimately, by the economist Schumpeter in
his concept of "creative destruction" (see: "creative destruction" in Economics:
Nietzsche, Sombart, Schumpeter by Higo Reinert and Erik S. Reinert).
"Rabindranath Tagore.
That we gain new life."
Sing our destruction,
Give us new form
Of its law-fixed path.
Our body grows weary
"Wake, Wake, great Shiva,
Comes the anguished cry -
5. The Ccrporation had sanctioned a term loan of an amount not exceeding Rs
400 lacs to the petitioner on 26.08.1991. The loan agreement between the
parties was executed on 03.02.1992 and, in order to secure the WP(C)
7097/2008 Page No.3 of 31 said loan, an equitable mortgage was created on
4. As pointed out above, the aforesaid issue arises in the backdrop of the repeal
of the Industrial Finance Corporation Act, 1948 by virtue of the Industrial Finance
Corporation (Transfer of Undertaking and Repeal) Act, 1993. The Corporation
was established under Section 3(1) of the Industrial Finance Corporation Act,
1948. Subsequent to the repeal of the Industrial Finance Corporation Act, 1948,
the undertaking of the Corporation stood transferred to and vested in IFCI
Limited which was formed and registered subsequently under the Companies
Act, 1956.
3. This question arises in the backdrop of another question, as to whether IFCI
Limited (respondent No.1) is a "financial institution" within the meaning of
Section 2(1 )(m) of the Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter referred to as the "said
Act")? And, this issue arises in view of the prayer sought by the petitioner for
quashing the notification No. SO 98(E) dated 15.02.1995, which has been issued
under Section 4A(2) of the WP(C) 7097/2008 Page No.2 of 31 Companies Act,
1956 notifying: FCI Limited as a public financial institution. If the plea taken by
the petitioner that it is not a financial institution within the meaning of Section 2(1)
(rn) of the said Act is accepted, then the proceedings initiated by IFCI Limited
under the said Act against the property of the petitioner in respect of which a
mortgage has been created. would be set at naught. This would be so because,
then. IFCI Limited would not fall within the meaning of the expression "financial
institution" as defined in Section 2(1)(m) of the said Act and, therefore, it would
not be entitled \0 avail the benefits available to a financial institution under the
said Act. On the other hand, if the contention of the respondents is accepted that
IFC! Limited is such a financial institution then IFCI would be entitled to take and
continue proceedings under the said Act.
thereof were wholly without jurisdiction. In the meanwhile, IFel Limited had
under the said Act pursuant to the issuance of the notice under Section 13(2)
institution under Section 2(1)(m) of the said Act and, therefore, the proceedings
Tribunal and, inter alia, took the plea that IFCI Limited was not a financial
Tribunal. it filed an appeal under Section 18 before the Debts Recovery Appellate
However, as the petitioner did not get any relief before the Debts Recovery
application under Section 17 of the said Act before the Debts Recovery Tribunal.
6. Being aggrieved by the said action of IFCI Limited, the petitioner filed an
WP(C) 7097/2008 Page No.4 of 31
property.
05.05.2008 IFCI Limited took physical possession of the said mortgaged
action but those objections were rejected by IFCI Limited. Consequently, on
effect from 15.01.2008, was made. The petitioner filed objections to the proposed
13.02.2008 in which a demand of Rs 18,21,38,8331- plus future interest with
13(2) of the said Act in respect of the said mortgage by issuing a notice dated
settlement talks were in progress, IFCI Limited also took action under Section
initiated by the petitioner with IFel Limited. According to the petitioner, while the
Act") for recovery of Rs 2,46,72,428/-. Pursuant thereto, settlement talks were
Banks and Financial Institution Act, 1993 (hereinafter referred to as .the DRT
Debts Recovery Tribunal invoking the provisions of the Recovery of Debts Due to
of Rs 2.16.93,294/-. Thereafter, IFCI Limited filed OA NO.122/1999 before the
of the loan. IFel Limited. on 05.10.1998 recalled the loan and demanded a sum
IFCI Limited. Since the petitioner, for some reason, had defaulted in repayment
Repeal Act, the undertaking of the Corporation stood transferred and vested in
1956 and on and from 01.07.1993, which was the appointed date under the
Subsequently. IFel Limited was formed and registered under the Companies Act,
Repeal) Act, 1993 (hereinafter referred to as .the Repeal Act") was enacted.
out above, the Industrial Finance Corporation (Transfer of Undertaking and
together with all buildings and structures standing thereon. Thereafter, as pointed
20.02.1992 in respect of plot Nos. 15-17, HUDA Industrial Area, Rewari, Haryana
7 To appreciate the rival contentions of the parties, it would be necessary to first
examine the statutory provisions. Section 13(1) of the said Act stipulates that
notwithstanding anything contained in Section 69 or Section 69A of the Transfer
of Property Act, 1882, any "security interest" created in favour of any "secured
creditor" may be enforced, without the intervention of the court or tribunal, by
such creditor in accordance with the provisions of the said Act and thus Section
13(1) gives the right to a secured creditor to enforce a security interest without
the intervention of the court or tribunal but in accordance with the provisions of
the said Act. The expression "security interest" is defined in Section 2(1)(zf) and
means right, title and interest of any kind whatsoever upon property, created in
favour of any secured creditor and includes any mortgage, charge,
hypothecation, assignment other than those specified in section 31 of the said
Act. It is clear that the mortgage created by the petitioner in favour of IFCI
Limited would be covered under the expression "security interest", provided IFCI
Limited is regarded as a "secured creditor". The expression "secured creditor"
has been defined in Section 2( 1)(zd) in the following manner:- "2(1)(zd) "secured
WP(C) 709712008 Page NO.5of 31
issued a public notice of sale of movable and immovable assets of the petitioner
and the date of auction was set at 28.07.2008. However, that auction failed but,
as there was imminent danger of a further auction being conducted, the petitioner
approached this Court by way of this writ petition seeking, inter alia, the quashing
of proceedings under the said Act as also the quashing of the notification dated
15.02.1995whereby IFCI Limited was notified as a public financial institution. A
declaration has also been sought in this writ petition that IFCI Limited is not a
financial institution under Section 2(1)(m) of the said Act and consequently
cannot be regarded as a secured creditor within the meaning of Section 2(1)(zd).
We would also like to point out that during the course of proceedings before this
Court. a Division Bench of this Court, by an order dated 15.01.2009 directed that
the proceedings before the DRT and the DRAT may continue, subject to final
orders of this Court.
- - -----
Industrial Development Bank of
(iii) the Industrial Development Bank of India, established under section 3 of the
Act, 1948 (7 of 1948);
Industrial Finance Corporation
(ii) the Industrial Finance Corporation of India, established under section 3 of the
the Indian Companies Act 1913 (7 of 1913);
and registered under
Industrial Credit and Investment Corporation of India Limited, a company formed
for the purposes of this Act, as a public financial institution, namely:- (i) the
Each of the financial institutions specfied in this sub-section shall be regarded,
financial institutions" in the following terms:- "4A. Public financial institutions. - (1)
8. We now move on to Section 4A of the Companies Act which specifies "public
the meaning of section 4A of the Companies Act, 1956 (1 of 1956);".
which defines "financial institution" to mean "a public financial institution within
In the present case we are only concerned with clause (i) of Section 2(1)(m)
the expression "financial institution" which has been defined in Section 2(1)(m).
WP(C) 709712008 Page NO.6of 31 This requires us to explore the meaning of
borrower of any financial assistance;"
security interest is created for due repayment by any
in whose favour
(iii) any other trustee holding securities on behalf of a bank or financial institution,
Oi) securitisation company or reconstruction company; or
(i) debenture trustee appointed by any bank or financial institution; or
banks or financial institutions and includes -
~\J\creditor" means any bank or financial institution or any consortium or group of
From a reading of Section 4A of the Companies Act, 1956, it is apparent that it is
in two parts. The first part falls under sub-section (1) and the second, under sub
section (2). Under the first part, the public financial institutions are specified by
name. Under the second part, a provision has been made for other institutions to
be notified in the official gazette as public financial institutions if the Central
Government so thinks fit. The proviso to sub-section (2) of Section 4A of the
Companies Act, 1956 is of vital importance for a decision in this case. It lays
(ii) not less than fifty-one per cent of the paid-up share capital of such institution
is held or controlled by the Central Government."
Provided that no institution shall be so specified unless - (i) it has been
established or constituted by or under any Central Act, or
WP(C) 709712008 Page NO.7 of 31 (2) Subject to the provisions of sub-section
(1) the Central Government may, by notification in the Official Gazette, specify
such other institution as it may think frt to be a public financial institution:
Security Interest Act, 2002.
(vii) the securitisation company or reconstruction company which has obtained a
certificate of registration under sub-section (4) of section 3 of the Securitisation
and Reconstruction of Financial Assets and Enforcement of
Act
(vi) the Infrastructure Development Finance Company Limited, a company
formed and registered under this
(v) the Unit Trust of India, established under section 3 of the Unit Trust of India
Act 1963 (52 of 1963);
(iv) the Life Insurance Corporation of India, established under section 3 of the
Life Insurance Corporation Act, 1956 (31 of 1956);
India Act, 1964 (18 of 1964);
the petitioner, was that this notification was bad in law and was beyond the
8. The submission of Mr Amit Sibal, the learned counsel appearing on behalf of
Affairs bearing No. S.0.1329 dated 8th May, 1978 by inserting the following entry
after entry (15):- "(16) Industrial Finance Corporation of India Ltd., formed and
registered under the Companies Act, 1956 (1 of 1956)".
the Central Government, in exercise of powers conferred under Section 4A(2) of
the Companies Act, 1956 specified IFCI Limited, formed and registered under the
Companies Act, 1956, to be a financial institution and amended the original
notification of the Government of India, Ministry of Law, Justice and Company
7. By virtue of notification No. SO 98(E) file No. 3/33/94-CL.V dated 05.02.1995,
in sub-section (2) of Section 4A of the Companies Act, 1956.
case centres on the interpretation to be given to the words and expressions used
Section 4A of the Companies Act, 1956. Therefore, the entire controversy in this
which is not a specified public financial institution under sub-section (1) of
Act and its entire undertaking has been transferred to and vested in IFCI Limited,
Industrial Finance Corporation of India no longer exists because of the Repeal
institutions mentioned under sub-section (1), the Industrial WP(C) 709712008
Page NO.8 of 31 Finance Corporation of India established under Section 3 of the
Industrial Finance Corporation Act, 1948 has been specifically mentioned in
clause (ii) thereof. Thus, if the Repeal Act had not been enacted, the Corporation
would have continued to exist and by virtue of Section 4-A (1) of the Companies
Act, 1956 it would have to be regarded as a public financial institution. But, the
capital of such an institution must be held or controlled by the Central
Government. Another important feature of sub-section (2) of Section 4A of the
Companies Act, 1956 is that it begins with the words - "subject to the provisions
of sub-section (1)". It is pertinent to note that in the specified public financial
that the institution should have been established or constituted by or under any
Central Act. The second condition is that not less than 51% of the paid up share
can notify an institution to be a public financial institution. The first condition is
down two conditions which have to be satisfied before the Central Government
intention of Parliament was clearly to "establish" the Industrial Finance
Act, 1948 and in particular to the Preamble and Section 3 thereof where the
10. Mr Sibal then referred to the provisions of the Industrial Finance Corporation
convey a different meaning.
so and consciously used the words "formed and registered" when it wanted to
7097/2008 Page No.10 of 31 used the word "established" when it wanted to do
Section 4A of the Companies Act. Thus, the Legislature consciously WP(C)
word "established" have been used differently in the very same sub-section (1) of
be evident from the fact that the expressions "formed and registered" and the
same meaning as "formed and registered" under the Companies Act. This would
the statute itself. He submitted that the word "established" does not have the
clearly shows that the institution must be created by or brought into existence by
that the manner in which the word "established" has been used in sub-section (1)
(iv) and (v) of sub-section (1) of Section 4A of the Companies Act. He submitted
Sibal, is given by the use of the very same word "established" in clauses (ii), (iii),
indication that this is the manner, in which it has been used, according to Mr
the Companies Act is used in the sense of bringing into existence or creating. An
9. It was contended by Mr Sibal that the word "established" in Section 4A (2) of
to take recourse to the provisions of the said Act.
said Act. The result of this would be that IFCI Limited would not be entitled in law
within the expression "financial institution" as appearing in Section 2(1)(m) of the
be regarded as a public financial institution and, consequently, it would not fall
quashed. According to Mr Sibal once the notification goes, IFCI Limited cannot
Limited is no longer satisfied and, therefore, the notification requires to be
holding or controlling not less than 51% of the paid up share capital of IFCI
He also contended that the stipulation as regards the Central Government
IFCI Limited was neither established by nor constituted under any Central Act.
7097/2008 Page NO.9of 31 the Companies Act, 1956 because, according to him,
powers given to the Central Government under Section 4A(2) of WP(C)
(=:r\ ~c;/z .
12. The Statement of Objects and Reasons further indicates that to deal with
these problems and in particular, to ensure greater flexibility and consequent
ability of the Corporation to respond to the needs of the fast changing financial
system, it was thought necessary "to establish a new company under the
11. Mr Sibal then referred to the Repeal Act of 1993. Reading the Statement of
Objects and Reasons behind the introduction of the Repeal Act, Mr Sibal
submitted that it was due to the continued decline in the availability of
concessional funds from the Government and the Reserve Bank of India over the
years as also the changes in the past several months (prior to the introduction of
the Repeal Act) in the financial sector that it had become obligatory for the
Industrial Finance Corporation of India to raise resources largely from the market.
However. the Industrial Finance WP(C) 709712008 Page No.11 of 31 Corporation
Act. 1948 permitted accessibility to the market only when it was backed by a
Government guarantee. As a result, the Corporation was prevented from raising
resources on competitive terms. It was also stated in the Statement of Objects
and Reasons that the Industrial Finance Corporation Act, 1948 provided a very
dominant role to its major shareholder, namely, the Industrial Development Bank
of India in the functioning of the Corporation. This situation was considered to be
anomalous as the two institutions, that is, the Industrial Finance Corporation of
India and the Industrial Development Bank of India, were competitors.
"a corporation to be called the Industrial Finance Corporation of India shall be
established for the purposes of this Act." He submitted that the Industrial Finance
Corporation of India was clearly a corporation which was established under the
Industrial Finance Corporation Act, 1948. It was governed by the said statute and
not by the Companies Act. It had no separate Memorandum or Articles of
Association and everything concerning the Corporation was incorporated and
provided in the said Act itself.
Corporation of India. The expression used in Section 3(1) of the Industrial
Finance Corporation Act, 1948 was to the following effect-
granted to the Corporation in connection with the affairs and business of the
all fiscal and other concessions, licences, benefits, privileges and exemptions
submitted that by virtue thereof, with effect from the appointed day (01.07.1993),
undertaking in the company. Referring to Section 5 of the Repeal Act, he
company. Section 4 of the Repeal Act dealt with the general effect of vesting of
Repeal Act merely transferred the undertaking of the Corporation to the
13. Continuing with his submission, Mr Sibal contended that Section 3 of the
not established under the Repeal Act.
is on the basis of this distinction, that Mr Sibal submitted that IFCI Limited was
under sub-section (1) of Section 3 of Industrial Finance Corporation Act, 1948. It
Section 2(c) as meaning the Industrial Finance Corporation of India "established"
Section 2(b) with the manner in which the word "corporation" has been defined in
Sibal sought to distinguish the manner in which the company has been defined in
(IFCI Limited) "to be formed and registered under the Companies Act, 1956". Mr
has been defined to mean the Industrial Finance Corporation of India Limited
"company" given in Section 2(b) of the Repeal Act wherein the word "company"
Companies Act, 1956 as would be clear from the definition of the word
:nto existence or created but it was yet to be formed and registered under the
as if by virtue of the Repeal Act, the new company - IFCI Limited, was brought
7097/2008 Page No.12 of 31 registered under the Companies Act, 1956. It is not
extinguished and a new company (IFCI Limited) was to be formed and WP(C)
substance. it was submitted by Mr Sibal that the old corporation was
levelled playing field across broadly similar financial institutions. In sum and
resources, facilitate expansion of its equity base in future, and create a more
strategies, provide greater autonomy, recourse to the capital market for raising
Corporation (IFCI) into a company would also enable it to re-shape its business
provided in the said Statement of Objects and Reasons that the conversion of the
on such day as will be notified by the Central Government." It was further
IFCI as well as the assets and liabilities and the staff of IFCI will be transferred
Companies Act. 1956. to which the entire undertaking, business and functions of
31 Act, rule, regulation or notification. Section 18 of the UTI Repeal Act reads as
Unit Trust of India wherever necessary in every WP(C) 7097/2008 Page No.14 of
made for substitution of the specified company or administrator in place of the
contemplate a complete privatization and, therefore, a specific provision was
was repealed. However, according to Mr Sibal, the UTI Repeal Act did not
Undertaking and Repeal) Act, 2002 whereby the Unit Trust of India Act, 1963
15. Mr Sibal also referred to a similar statute being the UTI (Transfer of
public financial institution.
exist and the new company, that is, IFCI Limited did not have the character of a
day, that is, 01.07.1993, and from that day onwards, the Corporation ceased to
Finance Corporation Act, 1948 stood repealed with effect from the appointed
the Repeal Act, Mr Sibal submitted that by virtue of that provision, the Industrial
Corporation was changed from government to private. Referring to Section 11 of
According to Mr Sibal, this in itself indicated that the very nature of the
not to continue to be such officersl employees of the company (IFCI Limited).
options were given to the officers or employees of the Corporation to continue or
Limited. He further submitted that by virtue of Section 8 of the Repeal Act,
be the subject matter of the Memorandum and Articles of Association of IFCI
Limited was to be conducted was not provided in the Repeal Act and that would
14. He submitted that the manner in which the management and affairs of IFCI
continue to be granted to IFCI Limited also.
Repeal Act, the benefits, privileges etc., which were available to it, would
mentioned in Section 4A(1) of the Companies Act, by virtue of Section 5 of the
contended that since IFCI was a public financial corporation specifically
force and, therefore, it could not even be WP(C) 7097/2008 Page No.13 of 31
granted to the company. He submitted that on that date, the said Act was not in
Corporation under any law for the time being in force, were deemed to have been
16. It was next contended by Mr Sibal with reference to "Gower and Davies"
Principles of Modern Company Law, Seventh Edition, that the constitution of a
company bears reference to two documents, that is, the Memorandum of
"18. In every Act, rule, regulation or notification in force on the appointed day, for
the words "Unit Trust of India", wherever they occur, the words, brackets and
figures "specified company referred to in the Unit Trust of India (Transfer of
Undertaking and Repeal) Act, 2002" or "Administrator of ,the specified
undertaking of the Unit Trust of India referred to in the Unit Trust of India
(Transfer of Undertaking and Repeal) Act, 2002", as the case may be, shall be
substituted." He submitted that by virtue of the said Section 18, the specified
company and the administrator of the specified undertaking of the Unit Trust of
India stood substituted in place of the words "Unit Trust of India" wherever they
occur in every Act etc. The result being that the reference to the Unit Trust of
India established under Section 3 of the Unit Trust of India Act, 1963 in Clause
(v) of Section 4A( 1) of the Companies Act, 1956 would be a reference to the
specified company or the administrator, as the case may be, referred to in the
UTI Repeal Act of 2002. Thus, by virtue of the said Section 18, though the Unit
Trust of India ceased to exist, its components, which were the specified company
and the administrator, were both specifically incorporated in Section 4A(1)(v) of
the Companies Act, 1956 and were, therefore, to be regarded as public financial
institutions. He submitted that this is also the ratio of the Supreme Court decision
in the case of Southern Petrochemical Industries Corporation Limited v.
Administrator of Specified Undertaking of Unit Trust of India & Ors : (2007) 2
SCC 282 (I). Mr Sibal submitted that a provision like the said Section 18 is
conspicuous by its absence in the Repeal Act of 1993. WP(C) 7097/2008 Page
No.15 of 31 Therefore, it was his contention that the legislative intent was clear
that IFC! Limited was not to be regarded as a public financial institution because
if it were so, Parliament could have very easily included a provision similar to the
said Section 18 of the UTI Repeal Act.
under~-
17. Lastly, Mr Sibal submitted that the second condition specified in the proviso
to Section 4A(2) of the Companies Act is also not satisfied in WP(C) 7097/2008
Page No.16 of 31 the present case inasmuch as the Central Government does
not now own or control at least 51% of the paid up share capital. It was submitted
that as on 31.03.2008, the Central Government did not own or control any part of
the paid up share capital of IFCI Limited. Though, in 1995, when the notification
dated 15.02.1995 was issued, the position was different. At that point of time, the
Central government did not own any shares in IFCI Limited but the combined
share holding of lOBI, L1C,GIC, UTI, SBI and other public sector banks and
subsidiaries was 53.98% and thereby the Central Government could have been
said to control 53.98% of the paid up share capital of IFCI Limited. But, according
to Mr Sibal, the contention of owning or controlling at least 51% of the
shareholding was not just a one- time requirement. It was necessary at the time
of issuance of the notification and it was also necessary that the same stipulation
would continue throughout the existence of the said notification. According to
him, if ownership and control of the Central Government fell below 51%, then
IFCI Limited would lose its public element and thereby lose its status of being a
public financial institution. He submitted that this requirement was not merely a
Association and the Articles of Association. According to the said work, the
Memorandum of Association must contain a specified minimum content and
normally contains little more than the required subject matter. The content of the
articles is very much under the control of those who establish the company, that
is, the incorporators and subsequently of the members of the company.
Consequently. the articles tend to be elaborate and relate to the internal affairs of
the company . .A.. reference was also made by Mr Sibal to Sections 33 to 36 of the
Companies Act and it was contended that IFCI Limited was established not by
the Repeal Act of 1993 but by the formation and registration of the company
under the Companies Act. The company"s constitution as it were, was governed
by the Memorandum and Articles of Association and not by any statutory
provision.
company to be formed and registered under the Companies Act, 1956 as would
there was a reference to the WP(C) 7097/2008 Page No. 18 of 31 specified
provisions of UTI Repeal Act of 1993 and submitted that even in the former Act,
transfer thereof from the Corporation to IFCI Limited. He compared the
submitted that there was a vesting of the entire undertaking and a complete
the Companies Act. Referring to the provisions of Repeal Act of 1993, he
of IFCI Limited was contemplated under the Repeal Act of 1993 and not under
there, the result would have been the same. Mr Kaul submitted that the creation
facilitation and was a mere rule of convenience. Even if Section 18 had not been
to Section 18 of the UTI Repeal Act, the special provision was only by way of
for the petitioner had placed much reliance on the absence of a provision similar
Southern Petrochemical (I) (supra). He submitted that while the leamed counsel
Unit Trust of India Act, 1963 which was considered by the Supreme Court in
Kaul submitted that a similar situation had arisen in the case of the repeal of the
government or privatization. It was only a new "avatar" of the Corporation. Mr
rid of these shackles and the object was not disinvestment on the part of the
this backdrop that the decision was taken to form a new company in order to get
shareholder in the Corporation and this had led to an anomalous situation. It is in
Furthermore. lOBI. which was a competitor of the Corporation, was a major
all such transactions would have to be backed by government guarantee.
becoming a problem because under the Industrial Finance Corporation Act, 1948
Reasons behind the Repeal Act of 1993. He stated that the raising of funds was
IFCI Limited. drew our attention once again to the Statement of Objects and
18. Mr Neeraj Kishan Kaut. the learned senior counsel appearing on behalf of
WP(C) 7097/2008 Page No.17 of 31
would not be entitled to take recourse to the provisions of the said Act.
financial institution and by virtue of the entire train of provisions, IFCI Limited
powers of Section 4A and, therefore, IFCI Limited cannot be regarded as a public
reasons, Mr Sibal submitted that the notification was beyond the scope and
(
3_\condition precedent but also a condition which subsisted thereafter. For all these
"We are also unable to agree with Mr. Andhyarujina that exemption from tax is a
mere concession defeasible by
be apparent from the definition of specified company under Section 2(h) of the
UTI Repeal Act. The Supreme Court construing similar provisions, held the
specified company as also the administrator as defined under the UTI Repeal Act
to fall within the scope and ambit of the expression "public financial institutions".
According to Mr Kaul. similar is the case in the present petition. Mr Kaul placed
reliance on Gammon India Limited v. Special Chief Secretary & Ors: (2006) 3
SCC 354 to submit that the Repeal Act of 1993 was not just a repeal but also a
simultaneous re- enactment. Referring to paragraph 73 of the said decision, Mr
Kaul submitted that whenever there is a repeal of an enactment and
simultaneous re-enactment, the re-enactment is to be considered as re
affirmation of the old law and provisions of the repealed Act which are thus re
enacted continue in force uninterruptedly unless, the re-enacted enactment
manifests an intention incompatible with or contrary to the provisions of the
repealed Act. He submitted that the mere registration of a company under the
Companies Act does not mean that it was not established by or constituted under
the Repeal Act of 1993. The intention was one of continuity. He further submitted
that all the conditions stipulated in Section 4A(2) of the Companies Act stand
fulfilled. lfCl Limited was established by and constituted under the Repeal Act of
1993 which was a Central Act. Thereafter, the notification was issued by the
Central Government in 1995 specifying IFel Limited as a public financial
institution. On the date of the notification, the Central Government owned or
controlled more than 51% of WP(C) 7097/2008 Page No.19 of 31 the paid up
share capital of IFCI Limited. He submitted that though the shareholding has
gone below 51% subsequently, the date of reckoning would be 15.02.1995, that
is, the date of the notification. A reference in this regard was made to paragraph
100 of Southern Petrochemical Industries Co. Ltd v. Electricity Inspector & ETtO
and Ors : (2007) 5 see 447 [hereinafter referred to as Southern Petrochemical
(II)]. The said passage reads as under:-
19. The resolution of this case, as would be apparent from the foregoing
discussion, would depend entirely on the interpretation of the provisions of
Section 4A of the Companies Act, 1956 and particularly the construction to be
given to the provisions of sub-section (2) thereof. In this context, it will have to be
determined as to what is meant by the expression "established or constituted by
or under any Central Act", It would also have to be determined as to whether the
condition of the Central Government holding or controlling not less than 51% of
the paid up share capital of the institution in question was only a trigger condition
or a condition precedent and not one which was required to be fulfilled at all
times, In this context, it will also have to be determined as to whether the validity
of the notification dated 15.02.1995 would have to be tested having regard to the
date on which it was made or the existence of the conditions would have to be
Government and does not confer any accrued right to the recipient. Right of
exemption with a valid notification issued gives rise to an accrued right. It is a
vested right. Such right had been granted to them permanently. 'Permanence'
would mean unless altered by statute. Thus, when a right is accrued or vested,
the same can be taken away only by reason of a statute and not otherwise. Thus,
a notification which was duly issued would continue to govern unless the same is
repealed." According to Mr Kaul, IFCI Limited had its origin in the Repeal Act of
1993 which was a Central Act. In that Act, it was specifically provided for the
establishment and consequential formation and registration of IFCI Limited under
the Companies Act. 1956. The Act also provided for a complete transfer of rights,
liabilities. privileges and concessions which had been granted earlier to the
Corporation to IFCI Limited. Mr Kaul, therefore, in view of the aforesaid
submissions contended that IFCI Limited would have to be regarded as a public
financial institution under Section 4A(2) of the Companies Act and consequently
as a financial institution within the meaning of Section 2(1 )(m) of the said Act.
Thus. IFel Limited would be WP(C) 7097/2008 Page No.20 of 31 entitled to
institute and continue any action under the provisions of the said Act. He
submitted that the writ petition ought to be dismissed.
Consequently, because of the provisions of Section 18 of the UTI Repeal Act, the
specified company and/ or the administrator were incorporated in clause (v) of
"the Unit Trust of India, established under Section 3 of the Unit Trust of India Act,
1963 (52 of 1963);"
In place of:-
"Administrator of the specified undertaking of the Unit Trust of India referred to in
the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002"
20. We shall examine the last point first. In Southem Petrochemical (I) (supra)
the issue arose as to whether the specified company and the administrator within
the meaning of the UTI Repeal Act, could be regarded as public financial
institutions falling under Section 4A(1) of the Companies Act, 1956 in place of the
Unit Trust of India, which had been established under Section 3 of the Unit Trust
of India Act, 1963. The Supreme Court came to the conclusion that by virtue of
Section 18 of the UTI Repeal Act, in every Act, rule, regulation or notification in
force, the words "Unit Trust of India" wherever they occurred would be
substituted by "specified company referred to in the Unit Trust of India (Transfer
of Undertaking and Repeal) Act, 2002" or "Administrator of the specified
undertaking of the Unit Trust of India referred to in the Unit Trust of India
(Transfer of Undertaking and Repeal) Act, 2002", as the case may be. In other
words, it was held that by virtue of Section 18, clause (v) of Section 4A(1) of the
Companies Act. 1956WOUld,in effect, be read as:- "specified company referred
to in the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002" or
:J_[)\considered at future points of time also. It would also be required of us to
examine the Supreme Court decision in Southern Petrochemical (I) (supra) and
to see as to whether any parallel can be drawn from that decision with regard to
the UTI Repeal Act while considering the present case whereby the Industrial
Finance Corporation Act, 1948 has been repealed and a new company, namely,
IFCI Limited has come into existence. WP(C) 709712008 Page No.21 of 31
and control of shareho.dinq was satisfied. An argument was made by Mr Sibal
date on which the notification was issued, the condition with regard to ownership
means that the said condition does not continue to be satisfied, though on the
controlled more than 51% of the paid up share capital of IFCI Limited. This
issued and on subsequent dates, the Central Government neither held nor
709712008 Page No.23 of 31 notice under Section 13(2) of the said Act was
banks and subsidiaries. It is also true that on the date on which the WP(C)
though institutions such as lOBI, L1C,GIC, UTI, SBI and other public sector
hold any shares in IFCI Limited, it controlled 53.98% of the paid up share capital
above that as on 15.02.1995, though the Central Government by itself did not
51% of the paid up share capital of IFCI Limited. It has already been mentioned
condition stood satisfied. The Central Government did hold or control more than
admitted position that as on the date on which the notification was issued, this
can be specified as a public financial institution. There is no doubt and it is an
holds or controls less than 51% of the paid up share capital of such institution,
4A(2) of the Companies Act that no institution in which the Central Government
21. Let us now consider the second condition stipulated in the proviso to Section
Limited.
Companies Act, 1956, has not been substituted to indicate a reference to IFCI
Industrial Finance Corporation of India in clause (ii) of Section 4A(1) of the
Section 18 of the UTI Repeal Act in the Repeal Act of 1993. The reference to
the provisions of Section 4A (2) thereof since there is no provision similar to
(supra) insofar as the present controversy is concerned. We are concerned with
no assistarce can be taken from the decision in Southern Petrochemical (I)
specifically named in Section 4A( 1} of the Companies Act, 1956 itself. Therefore,
4A( 1) which dealt with those public financial institutions which had been
section (2) of Section 4A. It was only concerned with the provisions of Section
Petrochemical (I) (supra) was not at all concerned with the provisions of sub-
the Supreme Court decision in Southern WP(C) 7097/2008 Page No.22 of 31
{ld.-2Section 4A(1) of the Companies Act, as public financial institutions. It is clear that
22. We can also take support from Southern Petrochemical (II) (supra) wherein
the Supreme Court, as pointed out above, in the context of an exemption
that the said condition with regard to shareholding was not only a condition :J-?-~precedent but also a condition subsequent and subsisting. His contention was
that the moment this condition was not no longer satisfied, IFCI Limited would
lose its status as a public financial institution. On first impression, this may be an
attractive argument. But. if it were to be accepted, it would perhaps lead to a
chaotic situation. An example would illustrate. Suppose at one point of time the
Central Government had 55% shareholding in such an institution. Suppose
further that ten days later. the Central Government sold of 10% of its holding and
another ten days later, the Central Government restored its shareholding to 55%.
In such a situation. if the argument of the learned counsel for the petitioner was
to be accepted, the notification would be valid till such time the Central
Government held 55% shares, then, ten days later it would become invaiid
because the shareholding dropped to 45% and again a further ten days on, the
notification would again become valid because the Central Government would
then hold 55% shares i., the said institution. Such a fluctuation or flip-flop in the
status of the institution is certainly not contemplated by the provisions of Section
4A(2) apart from the fact that it would lead to a very WP(C) 7097/2008 Page
No.24 of 31 chaotic situation. Therefore, we are in agreement with the
submission made by the learned counsel for the respondents that the validity of
the notification from the standpoint of shareholding would have to be examined
as on the date on which the notification under Section 4A(2) of the Companies
Act is issued. The condition with regard to the government owning or controlling
not less than 51% of the paid up share capital of an institution is, in our view,
merely a condition precedent for the purposes of examining the status of the
institution as a public financial institution and for the purposes of determining the
validity of the notification under Section 4A(2) of the Companies Act, 1956. It is
open to the Central Government, at any subsequent point of time to "de-notify"
an institution as a "public financial institution" if it deems fit.
23. We are now left to consider the first condition stipulated in the proviso to
Section 4A(2) of the Companies Act, 1956. We would have to examine the
meaning of the expression "established or constituted by or under any Central
Act". In the present case, the reference to the Central Act is that to the Repeal
Act of 1993. The question is whether IFCI Limited could be said to have been
established or constituted by or under the Repeal Act of 1993. It is clear that in
the Repeal Act of 1993 while there is WP(C) 709712008 Page No.25 of 31
reference to the company to be formed, IFCI Limited was to be fonned and
registered under the Companies Act, 1956. In that sense, IFCI Limited was not
formed or registered by or under the Repeal Act of 1993. The expression
"established or constituted by or under', in our view, would have to be construed
as "established by" or "established under" or "constituted by" or "constituted
under". This is so because the expression "by or under" is common to both the
words "establish" and "constitute". We are emphasizing this because the words
"by" and "under" have different connotations. The word "under" is wider in its
sweep than the word "by". This is clear from the Supreme Court decision in the
case of Re. Mitter & Sons VO CIT: AIR 1959 SC 868. In that case, the Supreme
Court was construing the effect and scope of the words "constituted under an
instrument of partnership" as appearing in Section 26-A of the Income Tax Act,
1922. The Calcutta High Court had come to the conclusion that the word
"constituted" meant created and that the preposition "under" used in the
aforesaid expression was inappropriate and the Court read the said word as "by".
The Supreme Court observed that the High Court had fallen into error in re
constructing the expression to read "constituted by an instrument of partnership"
in place of the expression "constituted under an instrument of partnership" as
appearing in the statute book. The Supreme Court observed that the High Court
had fallen into error in re-constructing the provisions of the statute instead of
construing them and that the word "by" could be substituted for the word "under"
notification. observed that a notification which was duly issued would continue to
govem unless the same is repealed.
also mean putting a thing in a legal shape."
mean VVP(C)7097/2008 Page NO.27of 31 only "to create", when clearly it could
examination now, was not, therefore, right in restricting the word "constitute" to
the Calcutta High Court in the case of R. C. Mitter & Sons v. CIT under
or establishing and the idea of giving a legal form to, a partnership. The Bench of
Thus, the word in this wider significance would include both the idea of creating
etc.)" and also "to give legal or official form or shape to (an assembly, etc.)".
"constitute" is said to mean, inter alia, lito set up, establish, found (an institution,
legal form. In the Oxford English Dictionary, Vol. II, at pp. 875 and 876, the word
it may mean that also. It also includes the idea of clothing the agreement in a
"The word "constituted" does not necessarily mean "created" or "set up", though
instrument." The Supreme Court went on to say:-
would be right to say that the partnership has been constituted under that
conditions of the partnership have been reduced to the form of a document, it
into existence by an oral agreement amongst the partners, if the terms and
observed as under:- "In such a case, though the partnership had been brought
which, at the initial stages, had not been reduced to writing. The Supreme Court
naturally, record all the terms and conditions of the contract between the parties
the description of an instrument of partnership. Such an instrument, WOUld,
conditions which may subsequently be reduced to writing which would answer
existence by an oral agreement between the parties on certain terms and
there may also be many cases where a partnership has been brought into
contract in writing, setting out all the terms and conditions of the partnership. but
Supreme Court observed that a partnership could be created or set up by a
harmoniously with the rest of the relevant provisions. In this context, the
instrument of partnership" had some meaning which could be attributed to them
then examined the issue as to whether the words "constituted under an
have been necessary to amend the wording of the section. The Supreme Court
capable of making sense WP(C) 7097/2008 Page No.26 of 31 and it would, thus,
Cynr0--(/'::;:;>
in the said Section 26-A only if the words, as they stood in the Section, were not
The word "establish" according to the Oxford English
creation also. The dictionary meanings of the word "establish" are as under:-
the word "establish" has a number of meanings and one of them includes
Basha v. Union of India: AIR 1968 SC 662, after reference to several dictionaries,
"establish" does not necessarily mean to "create". As pointed out in S. Azeez
24. A similar logic would apply to the word "established". For, even the word
WP(C) 709712008 Page No.28 of 31
1993.
was conceived and contemplated under a Central Act such as the Repeal Act of
which, though formed and registered subsequently under the Companies Act,
constituted by or under any Central Act could have reference to a company
also refer to "give legal or official form or shape to". Thus, an institution
and, as pointed out in R.C. Mitter & Sons (supra), the word "constituted" could
also of the view that the word "constituted" does not necessarily mean "created"
under a Central Act. the latter expression being of a wider amplitude. We are
very clear that the institution could have been constituted by the Central Act or
the words "by" and "under" have been used in the provision. The indication is
difficulty with regard to the use of the expression "by or under" inasmuch as both
Companies Act as in the case of IFCI Limited. In the present case we have no
have been subsequently clothed in legal form by registration under the
institutions which have been conceived or contemplated under a Central Act but
appearing in Section 4A(2) of the Companies Act, 1956 would have reference to
decision, we fell that the expression constituted under any Central Act as
and conditions of the partnership to writing. Drawing a parallel from the said
of mouth but have been subsequently clothed in legal form by reducing the terms
instrument of partnership but also those which may have been created by word
instrument of partnership" include not only firms which have been created by an
gabThe Supreme Court, thereafter, concluded that the words "constituted under an
.or". The proviso stipulates that no institution shall be specified to be a public
26. Till now we have proceeded on the basis that the two conditions mentioned in
the proviso to Section 4A(2) of the Companies Act, 1956 have to be satisfied
together. But, in reality the two conditions are separated by the disjunctive word
clear.
"constituted" makes the legislative intent of employing the wider meaning very
No.29 of 31 use of the expression "by or under" as also the supplemental word
originate" is regarded as .to establish". Furthermore, the WP(C) 7097/2008 Page
expression "constituted under". This is apparent from the fact that even "to
could have a wider meaning similar to the meaning we have ascribed to the
meaning as implying "created by" or under a specific provision of a statute or it
25. From the above, it is clear that the word "establish" could have a narrow
maintain, to prove. to found, create, originate or institute, to regulate.
things to prescribe, to make stable or firm, to found, to set up, to fix firmly, to
The word "establish" according to Words and Phrases means, amongst other
to accepted as true".
create and regulate, to secure public recognition in favour of, to prove and cause
to originate and secure the permanent existence of, to found, to institute, to
constitute for permanence, as officers, laws, regulations. etc., to enact, to ordain,
things.• set up or found, to make stable or firm, to settle, to confirm, to appoint or
The word "establish" according to Webster'SDictionary means. amongst other
existence. to prove. to convince".
make or fix firmly, to enact permanently, to make or form, to bring about or into
according to Black's Law Dictionary means, amongst other things, .to settle,
acceptance of, place beyond dispute. ascertain, prove". The word "establish"
strengthen. ratify, confirm, restore, place in a secure position, initiate, secure
up on a permanent or secure basis, bring into being. found. make stable or firm,
enactment or agreement. give legal form and recognition to, secure or settle, set
Dictionary means, amongst other things, to "institute or ordain permanently by
:.....
15.02.1995 is beyond reproach.
~he resultof the foregoingdiscussionis that IFel Limitedwould
have to be regarded as a public financial institution under Section 4A of
the Companies Act. As a consequence, it would be entitled to take
specified as a public financial institution under Section 4A(2) of the
Companies Act, 1956. Therefore, the validity of the said notification dated
if one of the conditions had been fulfilled, IFCllimited could still have been
27. In the present case, both the conditions st4and satisfied. But, even
Government may specify to be a public financial institution.
institution WP(C) 7097/2008 Page No. 30 of 31 which the Central
regard to its paid-up share capital (and vice versa) for it to qualify as an
or under any Central Act need not also satisfy the other condition with
In other words, an institution which has been established or constituted by
though, it may happened that in some cases both conditions are satisfied.
and normal sense in the said proviso, there is no resultants absurdity. In
other words, either of the two conditions are required to be fulfilled,
(See: State of Bombay v. RMD Chamarbaugwala: AIR 1957 SC 699;
Mazagon Dock v. CIT: AIR 1958 SC 861; and Prof. Yashpal v. State of
Chhattisgarh: (2005) 5 SCC 420). When we read the word "or" in its plain
case it may be read as "and", if it subserves the object of the provision
the word "or" must be considered in lts normal disjunctive sense unless
such a construction produces an unintefligible or absurd result, in which
Government. It is a well settled principle of interpretation of statutes that
financial institution unless (i) it has been established or constituted by or
under any Central Act, or (ii) not less than fifty-one percent of the paid-up
share capital of such institution is held or controlled by the central
1/ True Copy 1/
BADAR DURREZ AHMED, J
VEENA BIRBAL, J
JULY 09, 2010
SR
respective costs.
The writ petition is dismissed. However, the parties are left to bear their
interest" created in its favour.
recourse to the provisions of the said Act in order to enforce a "security
Amount
(Rs. in crores)
400.00
523.00
1573.00
316.00
2001-02
2002-03
2003-04
2004-05
Year
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI NAMO
NARAIN MEENA)
(a) The year-wise details of financial assistance provided to IFCI by the
Government of India since its registration as a company are as
under:
ViiI! the Minister of FINANCE be please to state:
(a) The details of the financial assistance/support guarantees provided
by the Government of India to IFCI Ltd., after its registration as a
company under the Companies Act, 1956;
(b) The purposes for the said financial assistance;
(c) 'Nhether the Government proposes to convert the amount of
optionally convertible debentures into equity; and
(d) If so, the reasons therefor?
2209. Shri SHRIPAD YESSO NAIK
A.T. NANPATIL
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
LOK SABHA
UNSTARRED QUESTION NO.2209
ANSWERED ON 06.08.2010
SUPPORT GUARANTEES IN IFCI
under Consideration of the Government.
(c) & (d): The matter relating to Optionally Convertible Debentures is
salvage the credibility of the financial system.
systemic risks, safeguard the interest of small investors and
\b) The Financial assistance was meant to prevent default, mitigate
3332.31TOTAL
220.312006-07
300.002005-06
Page10/26W.P.(C)No. 4596/2007
2. A complaint was made by the Respondent before the CIC stating
('CIe'). The CIe answered the question in the affirmative.
31st May 2007 passed by the Central Information Commission
consideration in this writ petition, which challenges an order dated
Information Act, 2005 CRTI Act')? That is the question that arises for
'public authority' within the meaning of Section 2(h) of the Right to
1. Is the Industrial Finance Corporation of India Ltd. ('IFCI Ltd.') a
JUDG~IENT17.08.2010
3. Whether the judgment should be referred in the Yesdigest?
1. Whether reporters of local paper may be allowed
to see the judgment? No
2. To be referred to the reporter or not? Yes
CORAM: JUSTICES.MURALIDHAR
RAVINDER BALWAN1 "". RespondentThrough: Mr. Shyam Moorjani withMr. Deepak Goel, Advocate.
versus
..." PetitionerThrough: Mr. Dinkar Singh andMr. Bharatshree, Advocates.
IFCI LTD·
Reserved on: 2ndAugust 2010Decision on: 17thAugust 2010
W.P. co 4596/2001
IN THE HIGH COURT OF DELHI AT NEW DELID
Page2 0/26W.P.(q No. 4596/2007
3. In the appeal before it, the CIC framed two questions: first, whether
an institution established under a law, would cease to be a public
authority once that law was repealed? And second, whether in this
case the shareholding by government can be treated as substantial
finance? The first question was answered by holding that IFCI Ltd.
was "established" under the Industrial Finance Corporation (Transfer
of Undertaking and Repeal) Act. 1993 ('the 1993 Act') which was an
Act made by Parliament. In answering the second question, the CIC
noted that IFCI Ltd. "admitted in the hearing and in the written
submission that the GOI owned/controlled bankslFI equity in IFCI is
23.53% as on 31-3-2007." Further, it clarified that "funds need not be
directly provided to constitute substantial finance to a body. In this
case it stands admitted that indirect finance of 23.53% exists, which
cannot be construed to be insubstantial." Thus, it held IFCI Ltd. to be
a public authority within the definition prescribed under Section
2(h)(d)(i) of the RTI Act.
that the Petitioner {FeI Ltd. had not published particulars on its
website nor appointed Central Public Information Officers ('CPIOs')
which it was required to do in terms of Section 4, Section 5(1) and
5i2) of the RTI Act respectively, on account of which information
available with the IFCI Ltd. concerning the complaints made to itwas
not able to be accessed. In response to the said complaint, the
Petitioner IFCI Ltd. took the stand that it was not a public authority
within the meaning of the Rll Act.
•
Page 3 of 26W.P.(C) No. 4596/2007
6. Section 11 of the 1993 Act reads as follows:
"11. (1) On the appointed day, the Industrial Finance
Corporation Act, 1948 shall stand repealed.
come into force on 1SL October 1992. Under Section 2(b) of the 1993
Act "Company" means ..the Industrial Finance Corporation of India
Ltd.. to be formed and registered under the Companies Act, 1956."
Under Section 2(c), the "Corporation" means the Industrial Finance
Corporation of India established under Section 3(i) of the Industrial
Finance Corporation Act, 1948. Section 3 of the 1993 Act states, "(ojn
such date as the Central Government may, by notification in the
Official Gazette, appoint, there shall be transferred to, and vest in, the
Company, the undertaking of the Corporation." The other provisions
concerned the general effect of the vesting of the undertaking in the
company, tax exemptions, officers and other employees of the
Corporation etc.
5. The Parliament enacted the 1993 Act which was deemed to have
It was the first developmental financial institution set up as a statutory
corporation under an Act of Parliament to pioneer institutional credit
to medium and large scale industries.
appreciate the issue that arises in the present petition. The IFCI was
established as a statutory corporation in 1948 by the enactment of the
Industrial Financial Corporation of India Act, 1948 ('the 1948 Act').
4. A brief enumeration of the history of IFCI Ltd. is necessitated to
History of IFeI Ltd.
Poge4of26W.P.(C)No. 4596/2007
34(6). Without prejudice to anything contained in the
proceeding sub section, the Central Government may, at any
time, appoint the Comptroller and Auditor General of India
to examine and report upon the accounts of the Corporation
and any expenditure incurred by him in connection with
~~34(4). The Central Government may in consultation with
the Development Bank at any time issue directions to the
auditors requiring them to report to it upon the adequacy of
measures taken by the Corporation for the protection of its
shareholders and creditors or upon the sufficiency of their
procedure in auditing the affairs of the Corporation, and may
at any time enlarge or extend the scope of the audit or direct
that a different procedure in audit be adopted or direct that
any other examination be made by the auditors if in its
opinion the public interest so requires.
significant, and read as under:
Of these. Sections 34(4), 34(6), 34(7), 35(3), 43(1) and 43(3) are
Companies Act, Sections 33. 34, 34A, 35 and 43 of the 1948 Act
continue to be applicable in terms of Section 11(1) of the 1993 Act.
incorporated as a company under the Companies Act, 1956 by virtue
of the above statute. The other peculiar feature of the 1993 Act was
that notwithstanding the incorporation of IFCr Ltd. under the
7. The effect of the above enactment of 1993 was that IFCI was
(2) Notwithstanding the repeal of the Industrial Finance
Corporation Act, 1948, the Company shall, so far as may
be. comply with the provisions of sections 33, 34, 34A,
35 and 43 of the Act so repealed for any of the purposes
related to the annual accounts of the Corporation."
Page 5 0/26W.P.(C) No. 4596/2007
43(3) Every regulation made under this Section shall be laid,
as soon as may be after it is made, before each House of
Parliament, whiIe it is in session, for a total period of thirty
days which may be comprised in one session or in two or
more successive sessions, and if, before the expiry of the
session immediately following the session or the successive
sessions aforesaid, both Houses agree in making any
modification in the regulation or both Houses agree that the
43( 1) The Board may, with the previous approval of the
Development Bank make and by notification in the official
Gazette regulations not inconsistent with this Act and the
rules made there under, to provide for all matters for which
provision is necessary or expedient for the purpose of giving
effect to the provisions of this Act.
35(3). The Reserve Bank and the Development Bank within
five months of the close of the financial year a statement in
the prescribed form of its assets and liabilities as at the close
of that year together with a profit and loss account for the
year and a report of the working of the Corporation during
the year, and copies of the said statement, account and report
shall be published in the Official Gazette and shall be laid
before Parliament.
34(7). Every audit report shall be forwarded to the Central
Government and the Government shall cause the same to be
laid before both House of Parliament.
;}~6such examination and report shall be payable by ·the
Corporation to the Comptroller and Auditor General of
India.
Page 6 0/26w.P.(e) No. 4596/2007'authority' within the meaning of Article 12 of the Constitution on
submitted that insofar as the IFCI Ltd. does not answer the test of an
under Section 2 (h) RTI Act had to be interpreted in pari materia with
"other authorities" under Article 12 of the Constitution of India. Itwas
counsel for the Petitioner was that the expression "public authority"
9. The main thrust of the argument of Mr. Dinkar Singh, the learned
Submissions of Counsel
from any other company registered under the Companies Act.
the Houses of the Parliament. This makes IFCI Ltd. very different
·B requires any modification in the regulations to be approved by both
Government and laid before the Parliament. Sub-section (3) of Section
Ltd. are required to be published in the Official Gazette by the Central
Section 35(3), the statement of accounts and the annual report of IFCI
which will cause it to be laid before the Parliament. In terms of
reports of IFCI Ltd. are to be forwarded to the Central Government
continue to apply. In terms of sub-clause (7) of Section 34, the audit
Section 11 of the 1993 Act, the provisions of the 1948 Act, which talk
of control by the Central Government over the affairs of the IFCI Ltd.,
incorporated as a company under the Companies Act by virtue of
8. It is apparent that notwithstanding the fact that the IFCI Ltd. was
regulation should not be made the regulation shall thereafter
have effect only in such modified form or be of no effect, as
the case may be: so. however. that any such modification or
annulment shall be without prejudice to the validity of
anything previously done under that regulation."
institutions, private banks, cooperative banks and mutual funds. Thew.v.tc)No.4596/2007 Page70/26
shares are subscribed by private companies including public financial
Government holds no shares whatsoever in the Petitioner. 76% of the
financed by the Central Government. It is pointed out that the Central
Fourthly, it is submitted that the IFCI Ltd., was not substantially
Since it had failed to do so. the Petitioner was not a public authority.
public authority within the meaning of Section 2(h) of the RTI Act.
Government had to issue a notification notifying IFCI Ltd. to be a
of Section 2(h)(d), the appropriate government, i.e., the Central
10. Thirdly, it is submitted by Mr. Dinkar Singh that for the purposes
Consequently. IFCI Ltd. ceases to be a body established by a statute.
Corporation of India Limited, subsequently named as IFCI Ltd.
and vested ill a new company called the Industrial Finance
the erstwhile assets of the predecessor of IFCI Ltd. were transferred to
requirement of Section 2(h)(b) of the RTI Act. It was submitted that
'under' an Act of Parliament. Therefore it did not satisfy the
incorporated by an Act of Parliament but was one incorporated
the repeal of the 1948 Act. IFCI Ltd. was no longer a company
company incorporated under the Companies Act. In other words, with
stood repealed by the 1993 Act. the Petitioner was like any other
or constituted by a law made bv the Parliament. Since the 1948 Act. .Second. it was submitted that the Petitioner is not a body established
would not be a public authority for the purposes of the RTI Act.
Biswas v. India" Institute of Chemical Biology 2002 (5) see 111, it
applying the tests laid down by the Supreme Court in Pradeep Kumar
Page80/26w.e.tc; No. 4596/2007subsequently. It is further submitted that in this case it is the 1993 Act
Act only because it has been converted into a public limited company
be a public authority within the meaning of Section 2(h)(b) of the RTI
of a central enactment. in this case the 1948 Act, it does not cease to
Act. It is pointed out that once a body comes into existence by virtue
assets worth Rs. 9060 crores stood vested in it by virtue of the 1993
Petitioner into a public limited company under the Companies Act,
other hand submitted that at the time of the conversion of the
11. Mr. Shyam Moorjani, learned counsel for the Respondent on the
fh) of the Rll Act-
the Constitution and therefore not a 'public authority' under Section 2
Government, it is not an authority within the meaning of Article 12 of
since there is no pervasive control of the Petitioner by the Central
Airport Authority of India AIR 1979 SC 1628, it is submitted that
Relying on the judgment in Ramana Dayaram Shetty v. International
pervasive" control over the day-to-day affairs of the Petitioner.
has neither a functional nor organizational/administrative "deep and
Petitioner is purely a commercial organization and the government
directors on the Board of the Petitioner. It is maintained that the
submitted that the Government of India could at the most appoint two
excluding the government directors and debenture directors. It is
Ltd.. the number of directors shall not be less than 3 or more than 15
of Clause 122 read with 124 of the Articles of Association of the IFCI
national insurance companies etc. It is further submitted that in terms
:2~Jbalance 24~,'O is subscribed by scheduled commercial banks and
directly from the Union Budget. Further budgetary provision of Rs.w.P.(C)No. 4596/2007 Page9 of 26
released by the Government of India between 2002-03 to 2006-07
IFCI Ltd. by the Ministry of Finance. Out of this, Rs. 2409 crore was
sum of Rs. 5220 crore towards grants has been communicated to the
government any time up to 2023. It is further pointed out that a total
were convertible at par into equity shares at the option of the
extent of Rs. 923 crares were held by the Government of India. These
the Companies Act. Optional Convertible Debentures (OCDs) to the
and had acquired a preferential right to vote under Section 87(2)(b) of
shares of Rs. 263.84 crores for a period of 20 years in the IFCI Ltd.
pointed out that the government owned companies held preferential
organizations was indicative of indirect substantial financing. It is
shareholding held by government controlled or government owned
shareholders of the Petitioner. In other words, the extent of
insurance companies. They formed the single largest bloc of
Petitioner is held by public sector banks, financial institutions and
~008 which shows that the 33.22% of the equity capital of the
to the Annual Report of the IFeI Ltd. for the year ending 31st March
Central Government rescued it from bankruptcy. A reference is made
the Central Government was evident from the manner in which the
that the extensive financial control over the affairs of the Petitioner by
1~. Referring to Section 2(h)(d)(i) RTI Act, Mr. Moorjani submitted
been created by a central enactment.
sense. the Petitioner in its present structure, is also an entity that has
\\ hich actually brought about the transformation and, therefore in one
Page 100/26w.p.fe) No. 4596/2007(1976) 2 SCC 58 to urge that the privatization of the Petitioner
Committee of Vaish Degree College, Shamli v. Lakshmi Narain
continues to do so. Reliance was placed on the judgment in Executive
India had guaranteed the bonds issued by the Petitioner, it no longer
from the Government of India. Although earlier the Government of
that the funds of the IFCI Ltd. came from the bond holders and not
liabilities of the IFCI Ltd. was not substantial financing. He submitted
Rs.1409 crores to IFCI Ltd. by the Government of India to meet the
arose in a very different context. He maintained that the release of
before this Court in the Finite Infratech Ltd. case and stated that it
dissociated from the submissions made on behalf of the IFCI Ltd.
l-l. In response 'to the third submission, counsel for the, Petitioner
a public financial institution.
Division Bench. that notwithstanding the 1993 Act, it continues to be
IFeI Ltd. had submitted. and which submission was accepted by the
had. in that case, argued contrary to its stand in the present case. There
(Finite Infratech Ltd. ". IFCl). It is pointed out that the Petitioner
Court in its judgment dated 9th July 2010 in W.P.(C) 7097 of 2008
status that has been recently affirmed by the Division Bench of this
Companies Act. the Petitioner was a "public financial institution', a
13. Thirdly. Mr. Moorjani pointed out that under Section 4A of the
amount is to be released during a ten years period, i.e., up to 2011-12.
Central Government in the Union Budget for 2008-09. The entire
-+33 crore has been made in respect of the grants to be given by the
w.P.(C)No.4596/2007 Page110/26
constituted' 'under' a central or state enactment. In other words
Constitution' and bodies that that have been 'established or
that have been 'established or constituted' 'by or under the
17. There is a clear distinction made by the legislature between bodies
directly or indirectly by funds provided by theappropriate Government;"
substantiallyOrganisation(ii) non-Governmentfinanced,
(i) body owned, controlled or substantially financed;
and includes any-
(a) by or under the Constitution;(b) by any other law made by Parliament;(c) by any other law made by State Legislature;(d) by notification issued or made by the
appropriate Government,
(h) "public authority" means any authority or body orinstitution of self-government established or constituted-
"2. In this Act, unless the context otherwise requires-
16. Section 2(h) of the RTI Act reads as under:
2{h)(b) RTI Act and the second relates to Section 2(h)(d)(i) RTI Act.
the plea that IFCI Ltd. is a 'public authority'. One relates to Section
2(h) of the RTI Act. two distinct submissions were made in support of
15. This Court would first like to note that for the purposes of Section
[Fe[ Ltd. is a body 'established' and 'constituted' by an Act ofParliament
being a statutory corporation.
brought about by the 1993 Act resulted in the Petitioner no longer
Page12 0/26w.p.(e) No. 4596/20072 (L) of the RTI Act. There is no need to tum to the Constitution for
question answers the description of a 'public authority' under Section
object of the RTI Act the only consideration is whether the body in
Act, the converse need not be necessarily true. Given the purpose and
of the Constitution is likely to be a 'public authority' under the RTI
While it is possible that an authority within the meaning of Article 12
Kumar Blswas for the purposes of Article 12 of the Constitution.
incorporating the tests evolved by the Supreme Court in Pradeep
authority' for the purposes of the RTI Act, there is no warrant for
the fact that there is a specific definition of what constitutes a 'public
'authority' for the purposes of Article 12 of the Constitution. Given
is no different from the test for determining whether a body is an
whether a bodyis a 'public authority' for the purposes of the RTI Act
of the learned counsel for the Petitioner that the test for determining
18. At this juncture. this Court would like to deal with the submission
stale enactment.
shown that they have been established or constituted 'by' a central or
for the purposes of the R11Act only on that score. It would have to be
enactment. However, that would not make them 'public authorities'
limited company is established (or 'incorporated') under that
such enactment. Take the Companies Act. Every public or private
central or state enactment. It has to be established or constituted 'by'
Act. it is not enough that it is established or constituted 'under' a
RTI Act, then to come within the purview of Section 2 (h) (d) (b) R11
where the body is not one falling under Section 2 (h) (d) (a) of the
Page 130/26w.e.«; No. 4596/2007
can be no doubt that but for the 1993 Act the IFCI Ltd. in its present
to be formed and registered under the Companies Act, 1956." There
"Company" means "the Industrial Finance Corporation of India Ltd.,
Government." Consequently, Section 2 (b) of the 1993 Act states that
transferred on such day as will be notified by the Central
as well as the assets and liabilities and the staff of IFCI will be
1956 to which the entire undertaking, business and functions of IFCI
necessary ·'to establish a new company under the Companies Act
to the needs of a fast changing financial system it was thought
Reasons of the 1993 Act after noting that it was necessary to respond
the provisions of the 1948 Act. In the Statement of Objects and
raise finances from the market. it was unable to do so on account of
Bank.of India, it became necessary for the predecessor of IFCI Ltd. to
of concessional funds from the Government of India and the Reserve
financial sector, coupled with the continued decline in the availability
i.e., the 1948 Act. Later, when on account of the changes in the
initially brought into existence or 'established' by a central enactment,
19. Reverting to the case on hand, IFCI Ltd. in its earlier form was
control or "dominance", are not helpful.
government the Article 12 tests, which talk of "deep and pervasive"
"substantially financed" directly or indirectly by the appropriate
RTI Act for determininz if the bodv is "owned", "controlled" or- .
for that purpose. Even for the purposes of Section 2(h)(d) (i) or (ii)
this purpose, particularly when there is a specific statutory provision
Page 140/26w.P.(C)No. 4596/2007in the considered view of this Court, based on a misreading of the
IFCI Ltd. cannot be said to be a 'public authority'. This submission is,
without a notification by the central government under Section 2(h)(d)
deal with the submission of the learned counsel for the Petitioner that
the meaning of Section 2(h)(d)(i) RTI Act, this Court would like to
21. Before examining whether IFCI Ltd. is a 'public authority' within
fIFCI is a public authority within the meaning of Section 2(h)(d)(i) )l!._TI Act as well
1993 Act in the circumstances noticed hereinbefore.
present status as a result of the joint operation of the 1948 Act and the
IFCI Ltd. is a public authority since it has been brought about in its
Consequently, this Court concurs with the view of the CIC that the
authority' within the meaning of Section 2(h)(b) of the RTI Act.
Parliament, makes the IFCI Ltd. answer the description of a 'public
1948 Act and the 1993 Act, both of which are Acts made by the
20. The peculiar character of the IFCI Ltd. with reference to both the
Government over the affairs of the IFCI Ltd.
These provisions underscore the extensive control of the Central
provisions of the 1948 Act, which have been extracted hereinbefore.
under the Companies Act, it retains the applicability of certain
that even while the 1993 Act converts the Petitioner into a company
1993 Act. Further, as already noticed, the added peculiar feature is
present form is a creature of the 1993 Act having been created by the
form would not have come about. In other words, IFCI Ltd. in the
w.e.«; No.4596/2007 Page150/26
Synonymous with material." The word "substantially" has been
as distinguished from something without value or merely nominal.
imaginary; not illusive; solid; true; veritable. Something worthwhile
Belonging to substance; actually existing; real: not seeming or
being "of real worth and importance; of considerable value; valuable.
Black's Law Dictionary (6th Edn.) defines the word 'substantial' as
'substantial' does not necessarily connote 'majority' financing.
of the body by the government is not insubstantial. The word
indicating a degree of financing. Itmust be shown that the financing
23. The word "financed" is qualified by the word "substantially"
answers the question in the affirmative.
the central government? For the reasons set out hereafter, this Court
"substantially financed" "directly or indirectly by funds provided by"
central government (which. is the appropriate government) or
arises is whether the IFCI Ltd. is a body that is "controlled" by the
22. For the purposes of Section 2(h)(d)(i) RTI Act, the question that
Section 2(hXd) (i) or (ii).
the central government as long as it satisfies the requirement of
be a 'public authority' even if there is no notification to that effect by
the scope of the earlier clauses (a) to (d). In other words, a body might
categories that follow those words are separate categories that expand
the provision is published in the official gazette) indicates that the
~'~bprovision. The words "and includes" starting from the left margin (as
---------- -
Page 160/26W.P.(C) No. 4596/2007
"This court therefore, concludes that what amounts to
"substantial" financing cannot be straight-jacketed into rigid
formulae, of universal application. Of necessity, each case
would have to be examined on its own facts. That the
held as under (para 58):
24. In Indian Olympic Association v. Veeresh Malik [judgment dated
7th January 2010 in W.P. (C) No. 876 of 2007] the learned Single
Judge of this Court was examining whether the Indian Olympic
Association, the Sanskriti School and the Organising Committee
Commonwealth Games 2010, Delhi were 'public authorities' under
the RTI Act. While answering that question in the affirmative, it was
Act it would be sufficient to demonstrate that the financing of the
body by the appropriate government is not insubstantial.
"Substantially" is closer to "essentially". Both words can signify
varying degrees depending on the context. In the context of the RTI
is closer to "material" or "important" or "of considerable value."
word 'substantial' is not synonymous with 'dominant' or 'majority'. It
substantial thing or being; essentially, intrinsically." Therefore the
defined to mean "essentially; without material qualification; in the
main; in substance; materially." The Shorter Oxford English
Dictionary (5th Edn.) the word 'substantial' means "of ample or
considerable amount of size; sizeable, fairly large; having solid worth
or value, of real significance; sold; weighty; important, worthwhile; of
an act, measure etc. having force or effect, effective, thorough." The
word "substantially" has been defined to mean "in substance; as a
relating to IIFCL, IFCI, IDFC, IBI, Exim Bank." Para 6.4 of thew.P.(C)No. 4596/2007 Page17of 26
one Joint Secretary for Institutional Finance in respect of the "matters
organizational set up of the Department of Financial Services, there is
Financial Reconstruction (BIFR), etc." Under the chart showing the
appointment of Chairman, and Members of Board for Industrial and
Institutions, appointment of Chief Executives of Financial Institutions,
"legislative and administrative work relating to All India Financial
26. Among the main functions of the Banking Division are
rrci, IDFC, UBI etc."
Institutions such as the NABARD, SIDBI, NHB, IIFCL, EXIM Bank,
a bearing on the working of banks and term lending Financial
issues relating to Public Sector Banks and administers policies having
that the Banking Division of the Ministry of Finance "looks after
2007-08 of the Ministry of Finance, Government of India. It states
25. The Respondent has placed on record a copy of the Annual Report
percentage of funding is not "majority" financing, or that the
body is an impermanent one, are not material. Equally, that the
institution or organization is not controlled, and is autonomous
IS irrelevant; indeed, the concept of non-government
organization means that it is independent of any manner of
government control in its establishment, or management. That
the organization does not perform - or pre-dominantly perform
- "public" duties too, may not be material, as long as the object
for funding is achieving a felt need of a section of the public, or
to secure larger societal goals. To the extent of such funding,
indeed, the organization may be a tool, or vehicle for the
executive government's policy fulfillment plan."
Page 180/26w.p.(e) No. 4596/2007
During the year 2006-07, IFCI earned a net profit of Rs.898
crore as compared to a net loss of Rs.74 crore in the
previous year. The accumulated loss as on March 31, 2007
stood at Rs.836 crore. The improved performance was
largely due to higher recoveries from Non Performing
Assets and consequent reversal of provisions/write-off and
also lower cost of funds. During the current financial year
2007-08, IFCI has made a net profit of Rs.l,063 crore for
During the year 2006-07, IFCI continued to focus on
recoveries from existing loan assets and reconstructing of
remaining high cost liabilities. IFCI sanctioned short term
loans of Rs.l ,050 crore and disbursed Rs.550 crore during
2006-07 to top performing and highly-rated corporates and
banks. Further, during the 9 months period ended on
December 31, 2007, IFCI sanctioned short term loans of
Rs.l,500 crore and disbursed Rs.2000 crore of the previous
year. Cumulatively, up to December 31, 2007, IFCI had
made aggregate sanctions of Rs.48,712 crore to 4,872
projects and disbursed Rs. 47,139 crore. In respect of North
Eastern Region, including Sikkim, cumulatively, up to
December 31, 2007, IFCI has sanctioned and disbursed an
aggregate sum ofRs.328 crore to 61 projects.
Industrial Finance Corporation of India (IFCI) is the first
Development Financial Institution of India set up in 1948 as
a Statutory Corporation under an Act of Parliament to
pioneer institutional credit to medium and large scale
industries. It was converted into a Public Limited Company
on July 1, 1993. The Govt. of India does not have any
shareholding in IFCI.
"6.4 Industrial Finance Corporation of India Limited
(IFCI)
Report reads as under:
Page 19 0/26w.P.(C)No. 4596/2007
With the model of Development Banking commg under
strain, the future of financial institutions has been occupying
the attention of the Government for some time. Narsimhan
Committee II and Khan Working Group have recommended
that Development Financial Institutions (DFIs) be converted
either into banks or into NBFCs. The Government have had
to step in from time to time to bailout IFCI from
bankruptcy. The Government of India contributed Rs. 400
crore as part of a capital infusion package in 2001 and yet
again committed to provide Rs. 5220 crore over ten years as
a part of the package to restructure the liabilities to IFCI.
Out of this, Rs. 2096 crore has already been released.
Operationally, however, no headway could be made in
recovery ofNP As or hiving off the bad assets.
"Dear Shri Singh,
of the IFCr Ltd. The said letter is instructive, and reads as under:
Director of the IFCr Ltd. with regard to the restructuring and bailout
Division) of the Ministry of Finance to the Chairman-cum-Managing
Director (EA & IF-I) Department of Economic Affairs (Banking
record a copy of the letter dated 29th January 2004 written by the
Report of the Ministry of Finance. The Respondent has also placed on
Government of India is plain from the above passage in the Annual
27. The extent of financial control over the IFCI Ltd. by the,.
the 9 months ended on December 31, 2007 against a net
profit ofRs.230 crore during the corresponding period of the
previous year. Further, as at December 31, 2007, IFCI,
having complied with RBI's Regulatory Capital Adequacy
Norm at 10% contemplates to start new business to top rated
corporates. "
Page 20 0/26W.P.(C) No. 4596/2007
29. It is plain that but for the intervention of the Government of India,
new financial year after their transformation."
Both these institutions, the IDBI and IFCI, should be functional in the
Reconstruction Company and merger with a large public sector bank.
restructured through transfer of its impaired assets to an Asset
Interim Budget 2004-05 in which he informed that the IFCI "will be
on yd February 2004 in Parliament during the presentation of the
communication was followed by the speech of the Finance Minister
financial support through the restructuring package. The above
28. Annexed to the letter is the detailed plan of the government's
Shri VP SinghCMD,IFCINew Delhi
Yours sincerely--sd--
(Atul Kumar Rai)"
With best regards,
2~\2. The matter has been deliberated at length in Government.
It is felt that IFCI does not appear to have long term
sustainability on a stand alone basis. It appears that the only
viable course of action is to merge IFCI with a large Public
Sector Delhi based Bank with which the IFCI has
operational and financial synergy. In this context the option
of merger with Punjab National Bank may be contemplated
by the Board of IFCI. A note on the subject, bringing out
how the merger could be of useful, is attached. I shall be
grateful, if you would kindly have the issue taken up with
the Board for favourable action in the matter.
grants worth Rs. 2412 crore released to the IFCI pursuant to thew.p.(e) No.4596/2007 Page21 0/26
Ltd., calls for further information from the IFCI Ltd. on the loan
Director General of Audit to the Chief Executive Officer of the IFCI
31. A copy of the letter dated 1sl March 2006 from the Office of the
the Government of India.
monitoring of the performance of the IFCI was being undertaken by
30. The above is further evidence of the fact that even in 2002 the
iii) A meeting under the chairmanship of Joint Secretary
(IF) may be convened on a monthly basis to monitor
performance of IFCI."
ii) IFCI may prepare a business plan and communicate the
same to the lenders inviting their suggestions
immediately.
i) A Group comprising representatives from IDBI, SBI,
PNB and Bank of Baroda may be constituted to monitor
the cash flows and approve the outflows of IFCI for at
least the next six months.
"9. As a part of the restructuring process, the stakeholders
also decided the following:
of the IFCI. Para 9 of the proceedings reads as under:
several decisions have been taken to squeeze the outstanding liability
(Banking Division) of the Ministry of Finance which shows that
2002 by the Director (EA & IF-I) Department of Economic Affairs
and IFCI held in New Delhi on 26th November and 2nd December
record are the minutes of the meeting of the stakeholders of the IDBI
the IFeI would not have been able to be restructured. Also placed on
Page22of26W.P.(C)No. 4596/2007
34. In Finite Infratech Ltd., the question that arose was whether the
Companies Act connotes control by the Central Government.
since a public financial institution in terms of Section 4A of the
important from the perspective of Section 2 (h) (d) (i) of the RTI Act
institution within the meaning of the Companies Act. This is
IFCI Ltd. is a public financial institution under Section 4ACompanies Act
33. The third aspect is that whether the Petitioner is a public financial
Act.~
description of a 'public authority' under Section 2(h)(d)(i) of the RTI
the IFCI Ltd. by the Central Government and therefore answers the
contention that there is both "control" and "substantial financing" of
financing of the IFCI Ltd. Consequently, this Court finds merit in the
been denied by the Petitioner, is another pointer to the substantial
OCDs of Rs. 522 crores by the Central Government, which has not
'substantial financing' by the Central Government. The holding of
of rupees to the IFCI Ltd. for its bailout cannot but be considered as
till now by the Central Government. Providing more than 5000 crores
package for the IFCI has been devised, monitored and controlled even
32. The facts narrated hereinbefore show that the entire bailout
of the Central Government over IFCI Ltd.
so on. There can be no manner of doubt that there is extensive control
c!)53sanctions of the Ministry of Finance, the utilization of such grants and
Page 23 0/26w.p.(e) No. 4596/2007
·'21.Let us nov..' consider the second condition stipulated in
the proviso to Section 4A(2) of the Companies. Act that no
institution in which the Central Government holds or
controls less than 51% of the paid up share capital of such
institution, can be specified as a public financial institution.
There is no doubt and it is an admitted position that as on
the date on which the notification was issued, this condition
stood satisfied. The Central Government did hold or control
more than 51% of the paid up share capital of IFCI Limited.
It has already been mentioned above that as on 15.02.1995,
though the Central Government by itself did not hold any
shares in IFCI Limited. it controlled 53.98% of the paid up
share capital through institutions such as IDBI, LIC, GIC,
UTI, SBI and other public sector banks and subsidiaries. It
This is encapsulated in para 21 of the judgment, which reads as under:
Act. This submission of the borrower was negatived by the Court.
institution within the meaning of Section 2( 1)(m) of the SARFAESI
13(2) of the SARFAESI Act was issued), it was not a public financial
shares (although it did on the date on which the notice under Section
of the recovery proceedings, the Central Government did not hold any
argument of the borrower was that since on the date of the institution
it in fact continued to remain a public financial institution. The
were not maintainable. In those proceedings, the IFCI Ltd. urged that
case. i.e., Finite Infratech Ltd. before the Debt Recovery Tribunal,
initiated by it under the SARFAESI Act against the Petitioner in that
and whether, if it had ceased to be such an institution, the proceedings
and Enforcement of Security Interest Act, 2002 (,SARFAESI Act')
2( 1)(m) of the Securitisation and Reconstruction of Financial Assets
Petitioner was a "financial institution" within the meaning of Section
-----------L
Page 24 0/26W.P.(C) No. 4596/2007
is also true that on the date on which the notice under
Section 13(2) of the said Act was issued and on subsequent
dates. the Central Government neither held nor controlled
more than 51% of the paid up share capital ofIFCI Limited.
This means that the said condition does not continue to be
satisfied, though on the date on which the notification was
issued, the condition with regard to ownership and control
of shareholding was satisfied. An argument was made by
Mr. Sibal that the said condition with regard to
shareholding was not only a condition precedent but also a
condition subsequent and subsisting. His contention was
that the moment this condition was not no longer satisfied,
IFCI Limited would lose its status as a public financial
institution. On first impression, this may be an attractive
argument. But, if it were to be accepted, it would perhaps
lead to a chaotic situation. An example would illustrate.
Suppose at one point of time the Central Government had
55% shareholding in such an institution. Suppose further
that ten days later, the Central Government sold of 10% of
its holding and another ten days later, the Central
Government restored its shareholding to 55%. In such a
situation, if the argument of the learned counsel for the
petitioner was to be accepted, the notification would be
valid till such time the Central Government held 55%
shares, then, ten days later it would become invalid because
the shareholding dropped to 45% and again a further ten
days on, the notification would again become valid because
the Central Government would then hold 55% shares in the
said institution. Such a fluctuation or flip-flop in the status
of the institution is certainly not contemplated by the
provisions of Section 4A(2) apart from the fact that it would
lead to a very chaotic situation. Therefore, we are in
agreement with the submission made by the learned counsel
Page 25 of 26W.P.(C) No. 4596/2007
36. The above judgment reinforces the submission of the Respondent
its essential character as 3 public financial institution would remain.
Central Government subsequently ceased to hold shares in IFCI Ltd.,
SARFAESI Act. This Court therefore held that even though the
it would be a financial institution under Section 2(1)(m)" of the
institution under Section 4A of the Companies Act. As a consequence,
;;IFCI Limited would have to be regarded as a public financial
such as the Repeal Act of 1993." Consequently, it was concluded that
Companies Act, was conceived and contemplated under a Central Act
company which, though formed and registered subsequently under the
constituted bv or under anv Central Act could have reference to a. .the Companies Act, the Division Bench held that "an institution
under any Central Act", occurring in the proviso to Section 4A (2) of
35. While interpreting the words "established or constituted by or
a:~bfor the respondents that the validity of the notification from
the standpoint of shareholding would have to be examined
as on the date on which the notification under Section
4A(2) of the Companies Act is issued. The condition with
regard to the government owning or controlling not less
than 51% of the paid up share capital of an institution is, in
our view, merely a condition precedent for the purposes of
examining the status of the institution as a public financial
institution and for the purposes of determining the validity
of the notification under Section 4A(2) of the Companies
Act, 1956. It is open to the Central Government, at any
subsequent point of time to 'de-notify' an institution as a
'public financial institution' if it deems fit."
W.P.(C)No. 4596/2007 Page260/26
AUGUST 17,2010akg
s.MURALIDHAR, J
by the Petitioner to the Respondent within four weeks.
writ petition is dismissed with costs of Rs. 10,0001- which will be paid
37. Consequently the impugned order of the CIC is affirmed, and the
the RTI Act.
that the Petitioner satisfies the requirements of Section 2(h)( d)(i) of
regard.
correspondence made by the Department of Financial Services in this
c) Supply me the certified copies of the noting sheets and
on the aforesaid communications of CVC; and
b) If so, what action has been taken by the Dept of Financial Services
Services for necessary action;
the Joint Secretary & Chief Vigilance Officer, Department of Financial
Demand for thorough investigation and action against guilty executives, to
Price @ Rs.35/- per share - Smacks foul playl fraud of Rs.168 crores -
in Purchase of 5% stake in MCS-SX by IFCI Management on Much Higher
Declaration - Demand for his removal and prosecution; and (ii) Irregularity
Kumar Rai as Whole Time Director in IFCI on False Mandatory
Employees Association complaining (i) Appointment obtained by Shri Atul
Government of India had forwarded the complaints dated 26th Sept.,2009
and 30" October, 2009 of the All India Industrial Finance Corporation
a) Whether it is a fact that the Central Vigilance Commission (CVC),
You are requested to kindly provide me the following
information under Right to Information Act, 2005:-
Sub: Application seeking information under RTI Act relating
to the affairs of IFCI Limited
Sir.
New Delhi-11 0 001
Sansad Marg
3rdFloor, Jeevan Deep Building
Ministry of Finance
Department of Financial Services
The Central Public Information Officer
Dated: 23"' August, 2010
By Speed Post
A N ME 'tuf_f- P us: ~l>LL":D
2~
F.No.20/17/2010-1F-1
Encl: IPO of Rs.101-
Sd/
(Signature of Applicant)
Name: SEBASTIAN
B6-2 h.No.8E Paschim Vihar
New Delhi - 110063
I am enclosing herewith Indian Postal Order No. 88E
4386762 of Rs.1 01- towards fee.
Yours faithfully,
Sd/
(Amrik Singh)
Under Secretary to the Government of India/CPIO
Kindly refer to your letter dated 23.08.2010 regarding IFCl's
investment into MCX Stock Exchange Limited. It is stated that
complaints on the subject have been received in this Department
and the same are under examination.
The name, address and phone number of Appellate Authority
(Department of Financial Services), Ministry of Finance is given
below:-
Shri Sanjeev Kumar Jindal, Appellate Authority, Ministry of
Finance, Department of Financial Services, Jeevan Deep Building,
310Floor, Parliament Street, New Delhi-110 001 - Tel: 23748726
Thanking you,
Sir,
To
Shri Sebastian
BH-2, H.No.8 E, Paschim Vihar
New Delhi - 110 063
Subject: RTI application of Shri Sebastian, Paschim Vihar,
New Delhi
Government of India
Ministry of Finance
Department of Financial Services
IF-I Section
Jeevan Deep Building, 310Floor,
Parliament Street New Delhi
Dated the September 28,2010
(a) Yes. Sir,
(b) & (c): A list of complaints is annexed. Whenever such complaints are
received, they are examined after taking comments of IFCI and action taken
wherever appropriate.
IRREGULARITIES IN IFCI
QUESTION
1655. SHRI SHRIPAD YESSO NArK
Will the Minister of FINANCE be pleased to state:
(a) Whether the Government received representation from the All India Industrial
Finance Corporation Employees' Association (AIIFCEA) about irregularities
taking place in Industrial Finance Corporation of India (IFCI) involving
higher officials;
(b) If so, the details thereof; and
(c) The action taken or proposed to be taken by the Government in this regard?
ANSEER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRl NAMO NARAIN MEENA)
J)6/GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOKSABHA
UNST ARRED QUESTION NO.16SS
TO BE ANSWERED ON 19THNOVEMBER, 20IOIKARTIKA28, 1932(SAKA)
S.No Date of Subject Representation by Status
. Complaint
I 22.12.~OO6 Irregularities! Shri Madan Lal, The matter was examined by
Corruption in IFCI I General Secretry, taking comments from IFCI.
I - All India Industrial IFCI has clarified that the
Demand for Finance complaints made by IFCI
immediate Corporation Employees Association are
!Employees'intervention not substantiated. CEO, IFCI
thorough Association has also clarified that in all
investigation and (AIIFCEA) cases, without exception, the
action against approval of Board of
guilty officials Directors of IFCI is sought
before accepting and
implementing the OTS. The
settlements entered by IFCI
are not inferior to other co-
I lenders and in many cases
IFCI has realized higher
amount
'" 22.7.2010 Complaint against Shri Madan Lal The IFCI has been requested.!.
corruption! General Secretary to send comments. The reply
Irregularities in (AIIFCEA) of IFCI is still awaited
I IFCI Ltd.
.., 7.12.2CI09 Irregularities by the Hon'ble MPs have The matter was taken up with
.)
Management of forwarded the IFCI and they have stated that
IFCI in the representation of the Board of Directors of IFCII
I
Iacquisition of 5% AIIFCEA decided to acquire 5% stake
Ishares in MCX-SX I in MCX-SX IFCI negotiated
TO BE ANSWERED ON 19.11.2010
ANNEXURE
AN1'.'EX TO LOK SABHA UNSTARRED QUESTION NO.l655
is higher then the price IFCI
SX at Rs.36 per share, which
acquired 4% stake in MCX-
IL&FSMisAugust"09,
pnce. Subsequently, In
made at a discount to IFCI
allotments in future being
shares to IFCI in case of
covenant to allot additional
protected in the deal through a
another entity has been
allotment at a lower price to
downside risk of future
Rs.35/- per share. The
stake in July, 09 at a price of
1 paid
the price3 and acquired the
Appellate Authority in this office.
If you are not satisfied you may prefer an appeal to the
2217/2010 does not seem to be received in the Department.
invited which are still awaited. The other letter dated
copy of which is enclosed. The comments of IFCI Ltd was
Employees' Association (AIIFCEA) on T" May, 2010 certified
Department from All India Industrial Finance Corporation
The letter dated 04.05.2010 received in this
say that the details information required by your letter is as under:
addressed to CPIO of this Department on the above subject and to
I am directed to refer to your letter dated 13.12.2010
Madam,
Finance Corporation of India Ltd. (IFCI Ltd).
RTI Act, 2005 relating to the affairs of the Industrial
12. R.K. Puram, New Delhi seeking information under
Application from Ms. Savita Anand, Q.No.938 Sector-Subject:
New Delhi-110022
R.,K. Puram
Q.No.938 Sector-12
Ms. Savita Anand
To
dated the January 7,2011
Parliament Street New Delhi
Jeevan Deep Building, 3rt!Floor,
IF-I Section
Department of Financial Services
Ministry of Finance
Government of India
ANNEYUe._<:: - P4~ (Co~F.NO.20/201201 O-IF-I
Encl: as above
Yours faithfully,
Sd/
(Raman Kumar Gaur)
Under Secretary to the Govt of India
Tel: 23748715
Shri Sanjeev Kumar Jindal, Director (F-I) / Appellate
Authority, Ministry of Finance, Department of Financial Services,
Room No.10, Jeevan Deep Building, 3rd Floor, Parliament Street,
New Delhi-110 001 - Tel: 23748726.
Excuse us for taking the liberty of writing to your honour once aqarn.
The Association vide their letters dated the 6thAugust, 17thAugust, 1ih
October, 215t October, 2009 and zs" March, 2010, has taken up the following
irregularities committed by the senior executives of IFCI for thorough
investigation and action :-
1, Perjury committed by Shri Atul Kumar Rai, CEO & MD, IFCI Ltd.
by furnishing false mandatory declaration to the Govt of India for obtaining
commercial employment in IFCI - In the mandatory declaration dated
31.5.2007 he has declared at point (b) that "J have not been privy to sensitive or
strategic information in the last three years of service, which is directly related to
the areas of interest of work of the organization that I propose to join or to the
areas in which I propose to practice or consult". By this declaration, he has
suppressed the facts that Shri Atul Kumar Rai himself was the nodal officer
Re. Irregularities/Rampant Corruption in IFel
Respected Sir,
Shri Pranab Mukherjee
Hon'ble Finance Minister
Government of India
North Block
New Delhi-110 001
By Speed Post
CorrespondenceAddress:
M-202 Anupam Apartment
EastArjun Nagar, Shahdara
Delhi-ll0032
4thMay, 2010NO.AIIFCEAlND12010-82
ALL INDIA INDUSTRIAL FINANCE CORPORATION
EMPLOYEES'ASSOCIATION
ab6
etc. The Association vide its letter dated the 17.08.2009 addressed to Hon'ble
Kumar Rai as CEe & MD in IFCI and his remuneration before joining IFCI etc.
subsidiary on huge salaries and efficacy of the selection process of Shri Atul
itsandIFCIinofficersretiredofappontment
Diwali/New Year Gifts, extravagant increase of salaries of selected officers, re-
of crores of rupees spent on advertisement in cricket matches, IBN Awards,
person viz. Mr Khandelwal against simple deposit of earnest money, allegations
Finarcial Services. huge sale of NPAs Loans by IFCI in favour of a particular
RS.350crores to the then DSP Merril Lynch, a non industrial concern through JM
Motors & Hindalco. Grant of deposit by way of Pass Through Certificate loan of
huge amount devowed on IFel in underwriting to DVR shares issues of Tata
loans in cases of Unitech Ltd, United Spirits Ltd, Core Projects Ltd, Lupin Ltd,
questionable acquisition of 17.4% shareholding of RAJUS in MAYTAS, grant of
the IFCI on various irregularities/allegations, appalling corruption including
,Secretariat, ROC vide its Notice dated 22.04.2009 called for explanation from
Companies(ROC), NCT of Delhi & Haryana - On the direction of Lok Sabha
Management - Notice dated 22.02.2009 issued to IFCI by Registrar of
2, Indulgement in Gross Corruption & Misuse of power by IFCI
post retirement employment in IFC!.
for suppression of facts and submission of false mandatory declaration for getting
cemanded removal of Shri Rai from IFCI and initiation of legal action against him
Finance Minister, has pointed out the details along with documents and
August & 12:n October, 2009 addressed to the Finance Secretary IHon'ble
committed by Shri Atul Rai. The Association vide their letters dated the 6th
relieved from the Gcvernment service on 31st May, 2007 and joined IFCI the very
next day i.e. the •.51 June. 2007."This tantamounts to "act of perjury"
:0 31.5.2007 as the Government of India's Nominee. He has mis-represented
the facts before the Competent Authority (FM) for obtaining approval to join IFC!.
Srri Rai had sought pre-mature retirement from the Government service giving
the reasons of attending certain personal and family matters whereas he was
,jealing with the affairs of IFCI in the capacity of Director (IF) and was
~epresenting the Government on the Board of Directors of IFCI w.e.f. 21.8.2005
stringent punishment.
crores to a 'willful defaulter'. The details say that the entire process of
sanctioning the loan of RS.225 crores to Blue Coast Hotels Ltd took less than 10
days and raised many eyebrows in IFCI corridors as well, which again smells
irregularity/foul play in sanction of loan. The Association vide its letter dated zs"March, 2010 addressed to the Secretary, Dept of Financial Services, Ministry of
Finance, has taken up the issue for a thorough investigation and inquiry in the
matter and officials of IFCI found guilty for sanctioning of aforesaid loan, should
be booked under Prevention of Corruption Act and other relevant laws for
'CORPORATE LENDING - More Pain -IFCI forks out Rs.225.00
edition dated 11til March, 2010 in its current account column at page 15 stating
"willful defaulter" by Reserve Bank of India - 'moneylife' magazine in its
4. Rs.225 crores of loan sanctioned by IFCI to a company classified as
come out so far
investigation and action against guilty executives, but nothing seems to have
along with verbatim of the aforesaid telecast, has requested for proper
vide its letter dated the 21st October, 2009 addressed to Hon'ble Finance Minster
The episode smells fraud of crores of rupees of public money. The Association
acquired by Union Bank of India and Bank of India had been arrived at by IFCI.
'basis' on which the said valuation of RS.35 per share, against RS.10 per share
Government as its Nominees on the Board of IFCI, had raised the question of the
picked up 6.68% stake from Financial Technologies @ Rs.10/- per share. As
reported in the said telecast, S/Shri K.V. Eapen, Joint Secretary and Sanjeev
Kumar Jindal, Deputy Secretary, Ministry of Finance who are representing the
Stare Minister of Finance, has taken up the issue to order an inquiry into the
allegations and initiation of suitable action against guilty officers
3. Irregularity in Purchase of 5% stake in MCX-SX (unlisted company)
by IFCI Management on Much Higher Price @ 35/- per shares - Smacks foul
play/fraud in crores - In a telecast on the 22ndAugust, 2009, CNBC-lV18, it
has been reported that IFCI acquired 5% stake in MCX-SX, an unlisted company
at the rate of RS.35/- per shares from Financial Technologies in July, 2009 and
total cost involved was Rs.236 crores. It has further been reported in the said
telecast that earlier in June, 2009, Union Bank of India and Bank of India have
General Secretary
Sd/-
With reference to Central Vigilance Commission's Office Memorandum
NO.37180/09-V-60406dated 16.10.09.
Mrs. Ravneet Kaur
Joint Secretary & Chief Vigilance Officer
Dept of Financial Services
Ministry of Finance
~ Floor, Jeevan Deep Building
Sansad Marg
New Delhi-11 0 001,•
No.AlIFCEAmDl201 G-83
Copy to:
Yours faithfully,
Sdi
(Madan Lal)
General Secretary
In view of the financial ilTegularitieslfrauds stated above, we once again
request YOI,Jrhonour to kindly look into the matter urgently and direct the
authorities concerned to take immediate necessary action before the situation
becomes worst from worse.
With respectful regards,
(Signature of the Applicant)
Sd/-
towards requisite fee.
2. I am enclosing herewith a I.P.O. NO.84E 25252 of Rs.10/
premier Financial Institution of the country ?
the aforesaid Memoranda to curb the irregularities/corruption in this
(8) If so, what action has been taken by the Prime Minister Office on
demanded for thorough investigation and action against guilty executives.
Price @ R.35/- per share - Smacks foul playlfraud of RS.168 crores and
purchase of 5% stake of MCX-SX by IFCI Management on Much Higher
appropriate punitive action against Shri Rai; and (ii) Irregularity in
Time Director in IFCI on False Mandatory Declaration demanding for
pointing out (i) appointment obtained by Shri Atul Kumar Rai, as Whole
India Industrial Finance Corporation Employees' Association, Delhi
dated 26thSeptember, 2009 and dated 4thDecember, 2009 from the All
(A) Whether the Prime Minister Office had received Memorandum
You are requested to kindly provide me the following
infonnation under Right to InformationAct, 2005:-
Corporation of India Ltd. (IFCI Ltd)
Sub: Seeking Information under RTf Act, 2005 relating to
the affairs of Management of the Industrial Finance
Sir,
New Delhi-110011
Government of India, South Block
Prime Minister Office
The Central Public Information Officer
Dated 21st January, 2010
New Delhi-110022
Q.No.938 Sector-12, R.K. Puram
Savita Anand
A ~\N~XU~(~ - P 1t-g8y Speed Post
Please refer to application dated 21.1.2010 received in this
office on 22.1.2010 on the above noted subject. Signed statement
furnished by the office in response to your request for information is
enclosed (one page). Copies of the 2 forwarding Notes referred to
therein are also enclosed (two pages).
2. Action for relief on petition of Shri Madan Lal is under the
purview of the Department of Financial Services, Ministry of
Finance, New Delhi. You are advised to approach the public
authority concerned for redressal.
Sir,
Subject: Application under right to information
New Delhi-110 022
Sector - 12, R.K. Puram
Q. No. 938
Smt Savita AnandTo
No.RTIf2061201O-PMR
Dated 08 February, 2010
Speed/Regd Post j_ r;r )Right to Information
PRIME MINISTER'S OFFICE
South Block
New Delhi - 110 101
Encl. three pages, as above
Yours faithfully,
Sd/
(Sanjukta Ray)
Deputy Secretary and
Central Public Information Officer
Tel: 23074072
3. For the purpose of section 19 of the Right to Information Act,
2005. Smt Amit Agarwal, Director, is the appellate authority in
respect of this office.
Sd/
(R.K.OAS)
Section Officer
Redressal of grievances and action on complaints is a matter
handled by the public authority concerned. Copy of the
forwarding note is endorsed to the petitioner so that the matter
is taken up directly with the appropriate authority for follow-up
action. In this case copies of the 2 forwarding notes can also be
provided to the applicant for further reference before the public
authority concerned.
Subject:- Application of Ms. Savita Anand under Right to
Infonnation Act, 2005.
Infonnation on the RTl application dated 21-01-2010 of Ms. Savita Anand is
given below :-
(A) Yes, both the petitions (Memoranda) datd 26-09-2009 and 04-12-
2009 have been received in this office.
(8) Petitions from Shri Madan Lal dated 26-09-2009 and 04-12-2009
were forwarded for action as appropriate to the Secretary. Department of
Financial Services, Ministry of Finance vide PMO 1.0. NOs. 1/3/2009-
PMP-1199273dated 10-12-2009 and 1/3/2009-PMP-1/106696 dated 21-
12-2009 respectively in accordance with the approved guidelines on
actionable petitions received in Public Wing.
RIGHT TO INFORMATION
RTII206/2010-PMR
PRIME MINISTER'S OFFICE
(Public - 1 Section)
Sd/
(R.K. DAS)
SECTION .oFFICER
Copy for information to:
Sh. MADAN LAL
M-202 ANUPAM PARTMENT, EAST ARJUN
NAGAR, SHAHDARA, DElHI-32
Sd/
(R.K. DAS)
SECTION OFFICER
SECRETARY, FlO FINANCIAL SERVICES, MlO FINANE
PMO ID No. 11312009-PMP1199273 dated 10-12-2009
A letter dated 26-09-2009 received in this office from Sh.
MADAN LAL is forwa~ herewith for action as appropriate.
Sub: PETITION OF Sh. MADAN LAL
GEN.SECY, (AllFCEA) , I CIO M-202 ANUPAM
APARTMENT, EAST ARJUN NAGAR, SHAHDARA,
DELHI-32
Prime Minister's Office
New Delhi-11 0101
------------=-~
Sd/
(R.K.DAS)
SECTION OFFICER
Copy for information to:
Sh. MADAN LAL
M-202 ANUPAM PARTMENT,EASTARJUN
NAGAR, SHAHOARA, OELHI-32
Sd/
(RK.DAS)
$ECTION OFFICER
SECRETARY,FlO FINANCIAL SERVICES, MlO FINANE
PMO 10No.1/3f2009-PMP1/1 06696 dated 22-12-2009
A letter dated 04-12-2009 received in this office from Sh.
MADAN tAL is forwarded herewith for action as appropriate.
Sub: PETITION OF sn, MADAN LAL
M-202 ANUPAM APARTMENT, EAST ARJUN
NAGM, SHAHOARA, OELHI-32
New Delhi-110101
Prime Minister's Office
Tel: 23748715
Under Secretary to the Government of India/CPIO
(Raman Kumar Gaur)
Sd/-
Yours faithfully,
New Delhi-110 001 - Tel: 23748726.
Room No.10, Jeevan Deep Building, 3rd Floor, Parliament Street,
Authority, Ministry of Finance, Department of Financial Services,
Shri Sanjeev Kumar Jindal, Director (IF-I) 1 Appellate
information is available in this regard.
examination with various agencies and Banks. Presently no
In this connection it is informed that the issue is under
mentioned subject.
29/1212010 seeking information under RTI Act, 2005 on the above
letter file No.20/2412009-IF-1dated 27/0412010 and your letter dated
I am directed to refer to this Department reply in part 'b' of
Sir,
Seeking information under RTI Act, 2005 relating tothe Affairs of IFCI Ltd
Subject:
New Delhi-110 022
R.K. Puram.
Q. No. 938 Sector - 12,
Smt Savita AnandTo
dated the February 2 , 2011
Parliament Street New Delhi
Jeevan Deep Building, 3rdFloor,
IF-I Section
Ministry of Finance - Department of Financial Services
Government of India
F.No.20/24/2010-IF-1
-~~---------=~
16-E, Feroz Shah Road, New Delhi-110001Tel: 011-23724358Email: [email protected];[email protected]
compensation structure to market compensation. Have all
1. In recent times IFCI switched over from a conservative RBI type
to check and verify the following :-
In your capacity as Chief Vigilance Commissioner, I call upon you
people to ask some questions.
have come to my notice and I feel obliged as representative of the
disturbing facts about the organization's working and management
corporate governance standards at all times. However some
and it is important for it to function transparently deploying best
IFCI Ltd. is a public finance institution owned by the people of India
Dear Sir,
New Delhi
The Chief Vigilance Commissioner
To
16TH Feb.,2011BY HAND
Haj Committee of India•
Committee on Paper Laid on Table (Rajya Sabha)•
Consultative Committee on Ministry of HomeAffairs•
Member:Standing Committee on Social Justice &Empowerment•
MEMBER OF PARLIAMENT
RAJYASABHA
GENERAL SECRETARY:JAMIAT ULAMA-I-HINDI
MAHMOOD. MADANI
matters related to compensation been brought to the notice and
approved by the Board particularly related to:-
Implementation of the Hewitt report. Reportedly there are
disparities between what was recommended by the consultant
and what was implemented and a thorough re look would reveal
this.
2. Sizable bonus/monetary reward was given to about a dozen to
frfteen selected officers in around April, 2010. Total outgo was around
rupees two Crores. Was the Board apprised on this or approval taken?
3. Periodic reporting is to be down to the Board on various matte3rs
and for this the frequency of reports is well defined and laid out by the
Board. Has all such reporting been done in prescribed frequency in the
last two years? Board should thoroughly examine which of its powers
have been usurped by the management otherwise the board would find
itself derelict.
4. I understand CEO & MD as CMOs earlier, are to take permission of
the Board and to inform about the overseas travel. How many times has
Sri Atul Kumar Rai travelled abroad in the last two years? Did the Board
approve all his travels? How many times has his wife Mrs. Babni Lai, also
a government servant, travelled with him? How has her travel expense
been met? Who has paid for her travel? This data may be obtained for
the entire period that current CEO & MD has served with IFC!.
5. How many cars and of what make does IFCI Ltd own as on date?
6. Whether off spring of any IFCI employees are working in IFCI,
directly recruited or on deputation from IFCI subsidiary. If so, then at what
level and what is their cost to company as also whether their parents are
in their line of reporting?
7. What was the salary of Sri Atul Kumar Rai when he took over as
CEO & MD and what is his salary as on date and how does it compare to
salary of heads of lOBI and other large banks like SBI and PNB?
furnish the increase in staff strength of IFIN since the induction of current
and in what period of time has he been re designated? Also please
he was appointed to head operations of IIDL? How many times since then
IFIN wee appointed? What was the exact rank of MD of IIDL in IFCI when
I request an examination of the way in which current heads of IIDL and
12. Is the Board satisfied in the way IIDL and IFIN are being managed?
by IFCI to these organizations in current CEO"s tenure?
IFCI are Chaired by Atul Rai and what loans and grants have been given
11. How many subsidiary companies and management institutions of
crores of public money?
question the credibility of a man who is responsible for thousands of
know about it? If so then does the Board have any moral responsibility tor
no dealing with IFCI in the last three years of his service" Does the Board
seeking his release from Government to join IFCI with regard to his having
10. Did Atul Kumar Rai submit a false undertaking to DEA at the time of
cautioned? Was Mr. S.K. Mandai one of them?
subsequent to which one officer was penalized and two were
million which was recalled: A vigilance inquiry was conducted
IFel sanctioned a loan to AEG Sangyong Ltd. of amount US$ 8.55
dated June 2001)
guilty and penalized subsequent to a departmental inquiry. Was the
same Mr. S.K. Mandai then GM one of the penalized officers. (As
has appeared in your own Board memo number ACD-4/2001-02
sanctioned a loan of rupees 500 crores some officers were found
In the case of AVI packaging Ltd. where IFCI
post age of superannuation?
9. Is it true that one Mr. S.K. Mandai is now on his second extension
'2,0{)8. Name and number of all the Executive Directors who have reported
to Sri Atul Kumar Rai since he took over as CEO & MD. Have they all left
the organization prematurely and if so then why?
t
M.A. Madani
Sd/-
Yours sincerely,
You are requested to examine the points above expeditiously and
take action as you deem fit. Please also feel obliged to inform the
undersigned .
Thanking you,
misbehavior with a senior Member of Parliament?
14. $hould the appointment at under board level positions be the
prerogative of CEO who does not even chair the board? What was the
earlier procedure and why has it been dispensed if so?
15. Is it true, or does the board know at all, that Atul Kumar Rai is being
examined by the Privileges Committee of the Parliament for alleged
13. Please examine IFCl's investment in unquoted equity and profits it
is likely to generate. Also what is the contribution to income from actual
operations exduding sale of shares and NPA resolution.
MD along with the corresponding financial growth of IFIN and its profit
figures.
nandu@nksingh.,com
Shri Madan L~I
All India Industrial Finance Corporation Employees'
Association
C/o H-159 Plot No.29 Ramakrishna Vihar
J.P.Extn, Patpargnj
Delhi- 110092
Yours sincerely,
Sd/
(N.K. SINGH)
Kindly refer to your letter NO.AIIFCEAlND/312011-108dated
21st February 2011. I have sent your letter to Secretary, Financial
Services in ~ Ministry of Finance for further
examination/consideration as appropriate.
WJth Best Wishes,
Dear Shri lal,
22 February 2011
Member of Parliament
(Raga Sabha)
It is shocking that Indian Government officials continue to contribute
to the erosion of the aam aadrni's faith by becoming a party to
some scam or the other. The fresh matter pertains to none other
than the current Comptroller and Auditor General of India (CAG),
Vinod Rai, one of the reputed officers in the country, who allegedly
gifted the top job in the Industrial Finance Corporation of India to
Atul Rai. The IFCI, which was created to cater to the long-term
finance needs of the industrial sector, now seems to be scam- hit
BT EXCLUSIVE
By ANUPAM SHARMA
Vinod Rai involved in
fraudulent appointment
of IFCI CEO
Page No.2B, 29, 3D, 31, 34, 35 & 36
TIME FOR VINOD RAI TO ACCEPT HIS WRONG
TIME FOR GOVERNMENT OF INDIA TO
REMOVE ATUAL RAI
TIME FOR CAG VINOD RAI TO COME CLEAN
TIME FOR CAG'S OFFICE TO QUESTION
VINOD RAI'S INTGEGRITY
TIME FOR PARLIAMENT TO ACT
CAG
investigation
AN N E'XO (L~1'£:12ca2-
BUREAUCRACY TodaY-MARCH 2011
with questions being asked about the appointment of its current
Managing Director and Chief Executive Officer, Atul Kumar Rai.
AN EXCLUSIVE REPORT
The current CAG and the IFCI top man have more in common than
their surnames. which is Rai. They bother are allegedly believed to
have connived for the top job in the IFCI. CAG Vinod Rai and IFCI
CEO and MD Atul Kumar Rai have allegedly helped each other and
got the latter placed at the helm of affairs in the IFCI. Vinod Rai has
allegedly gone out of the way to ensure that Atul Kumar Rai gets
the plum posting at the IFCI by exercising his influence.
CHRONOLOGY OF EVENTS
Prior to his appointment as Comptroller and Auditor General (CAG),
Vinod Rai, a 1972 batch lAS officer, was posted as Joint Secretary,
Additional Secretary and Secretary (Financial Services) in the
Ministry of Finance. He was also the Government Nominee
Director on the Board of Directors of the IFC!. Atul Kumar Rai (IES
1985) worked under him in the Department of Financial Services
(DFS). Ministry of Finance, from November, 2002 to May 31, 2007.
Among other responsibilities Atul Kumar Rai was looking after the
issues relating to the sanction and disbursement of loans and
grants by the Government to the IFCI, exploring various options for
restricting the IFCI by way of inducting a strategic partner, its
possible merger with a PSU bank and the restructuring of IFCI
liabilities towards PSU banks and insurance/financial institutions for
a period of about four and a half years. And Atul Kumar succeeded
Vinod Rai as the Government Nominee Director on the IFCI Board
on August 21,2005 and remained in the position till May 31,2007.
While in the DFS, Atul Kumar had active personal support
and recommendations of Vinod Rai, who later on got himself
MODUS OPERANDI
On February 5, 2007, Atul Kumar sought voluntary retirement from
the DFS on the grounds of attending to certain personal and family
matters at the earliest. The application of Atul Rai was examined at
various levels and forwarded t the Secretary, Financial Services,
Banking. Vinod Rai, who apparently helped Atul Rai in getting
relieved as soon as possible. Subsequently Amitabh Verma, Joint
Secretary (Admin), MoF, recorded on April 30, 2007.
"Discussed with Secretary(FS}. In view of the budget session
of Parliament being in progress, it may be difficult to relieve Atul Rai
immediately. Hence it has been decided to relieve him with effect
trom May 31, 2007. Shri Rai has agreed to this. May inform DEA
(Cadre Controlling Authority in IES}."
As soon as the above notings were recorded, the same day
- April 30, 2007 - Atu Rai submitted an other note seeking
permission for taking up the appointment as a Wholetime Director
in the IFCI. In the above mentioned note Atul Rai explained that
the Board of IFCI, which is a public financial institution, at its
meeting held on March 7, 2007 had resolved to offer him the post
of Wholetime Director and he wants to join them as early as
possible.
The question arises here that though his appointment was
approved by the IFCI Board on March 7, 2007 Atul Rai did not
disclose this fact to the DFS for 54 days. Why?
appointed as a Wholetime Director of the IFCI from June 1, 2007
and subsequently re-desiqnated as the CEO and MD from July 11,
2007. The two seem uncomfortably close.
Now, how did that happen is a story worth following.
three years of his official career and make a mandatory declaration
in the form of an affidavit that he has not been privy t sensitive or
strategic information in the last three years of service. As per
notings of the Finance Ministry, Atul Rai never submitted his
application in Form 25 which was a necessary prerequisite for
seeking Government permission.
While Government approval for appointment in the IFCI was
conveyed to Atul Rai on June 1, 2007 vide Banking Division letter
No.A-19011/229/2002/Estt subject to his submitting the Mandatory
Declaration. Rai chose to submit a backdated (May 21,2007)
Declaration wherein he declared: "I have not been privy to
sensitive or strategic information in the last three years of service,
which is directly related to the areas of interest or work of the
organization that I propose to join, or to the areas in which I
propose to practice or consult."
As per Rule 10 of the CCS (Pension) Rules, Atul Kumar Rai was
required to seek Government approval in the prescribed Form 25
for taking up a post-retirement commercial employment and was
required to state if he had any dealings with the IFCI in the last
FLOUTING RULES
While examining the request of Atul Kumar Rai, it has been
stated on page 43 of the notings of the DFS that he had applied for
the appointment in the IFCI against an advertisement. However, in
a reply to an RTI query the IFCI said: "No advertisement was
issued by IFCI for the post."
How did Atul Rai come to apply for the post which was never
advertised and why did he write to the DFS that he had been
offered a job at the IFCI ?
Still Atul Rai got the top job at the IFCI allegedly by the
consistent backing of then Secretary (FS) Vinod Rai.
ROLE OF VINOD RAI
Being a senior bureaucrat Vinod Rai must be well aware
about the Rules and Regulations for post-retirement commercial
employment by Class I Officers of the Government. According to
these rules, an officer intending to join commercial employment
after taking retirement from Government service must not have
been privy to sensitive or strategic information in the last three
years of service, which is directly related to areas of interest of the
organization he proposes to join. It was well within the knowledge
of Vinod Rai that Atul Rai was holding a strategic position in the
IFe!. Despite this, ignoring all rules, Vinod Rai had repeatedly
Now, contrary to the above mandatory declaration submitted
by Atul Rai, it may be observed that by holding the strategic dual
position of Director (IF) and Government Nominee on the Board of
Directors of the IFel, Rai had been a privy to all sensitive and
strategic information about the IFel for more than three years of his
service. This fact has been confirmed by Namo Narain Meena,
Minister of State for Finance. In his letter No.1/43/2009-stt (Part
file) dated May 19, 2010. The letter says. "I have been informed
that during his tenure in the Department of Financial Services, Atul
Rai had dealt with matter pertaining to IFel requiring Government
interface. Further during the period from 21.08.2005 to 31.05.2007
he was on the Board f IFCI Ltd as a Nominee Director and in that
capacity he was privy to all Board level matters of IFCI Limited."
Further the lfCl to whom the letter was referred also confirmed that
''As Director (IF) Atul Rai was handling policy issues of Banks and
Fls."
2) Noting on page45 on 21.05.2007
Vinod Rai wrote "FM may consider granting permission to enable
Atul Rai to join IFCI on his seeking premature release from Govt.
He is professionally competent and IFCI Board has sought his
services."
To which the then Finance Minister, P. Chidambaram, replied,
"Para 8 not correct. Pis discuss." (This para pertained to the
eligibility of Atul Rai's candidature for the top job at the IFCI)
3) Noting on page45-46
"Discussed with FM. Approval of FM is sought for Shri Atul Rai to
join as Whole-time Director on the board of IFC!. The officer is
professionally competent, has a good track record and had
acquitted himself in handling policy issue of Banks and Fls."
Signed - Vinod Rai.
4) It is informally understood that Vinod Rai was himself
present at the meeting of the Board of Directors of IFI on March 7,
2007 when the appointment of Atul Kumar Rai was approved.
made strong recommendations with his appreciative remarks for
the appointment of Atul Rai as a Wholetime Director in the IFCI on
a salary much higher than for his Government service. The
following facts will substantiate the favourtism shown by Vinod Rai
for Atul Rai.
1) Noting by Amitabh Verma, JS(Admin) on April 30,2007 on
page 37 wherein he had discussed the matter with Secretary (FS)
Vinod Rai, about relieving of Atul Rai which was deferred to 31-05-
2007. On the same day (30-04-2007) Atul Kumar Rai submitted a
note seeking Government approval to join the IFC!.
the IFCI "helps" institutions lie the MCX-SX and the National Stock
communicate. There is a procedure for it". He further added that
Act lays down how the Director of a company needs to
Director he is free to take decisions". He says, "The Companies
"IFCI is a different class institution than PSU banks and also as a
brusquely denied any fraud in the live interview saying that the
IFC!. IFCI CEO Atul Rai spoke to a 1V channel about the deal and
the rate of Rs.10 per share inflicting a loss of RS.168 crores on the
and the Bank of India acquired the shares of the same company at
higher price of RS.35 per share whereas the Union Bank of India
percent stake in the MCX-SX by IFCI management on a much
The first such financial irregularity is that 0 purchasing a five
irregularities during his management of the IFCI.
Atul Rai's decisions and cited non-transparent dealings and
Corporation Employees Association has raised many objections to
proper reasons for the change. The All India Industrial Finance
70 to 80 new employees replacing the old guard without giving
many employees working with the IFCI. He has allegedly recruited
Retirement Scheme and the Compulsory Retirement Scheme for
the Corporation. The allegedly arrogant Rai ordered the Voluntary
Executive Officer Atul Kumar Rai has brought in many "changes" in
After joining the IFCI as Wholetime Managing Director and Chief
1rtains to a very esteemed and high office in a democracy.
~ATUL KUMAR RAI AT THE HELM OF IFel
The CAG should clarify and come clean on this matte as it
got the top job at the IFCI.
for Atul Rai present a clear picture of favouritism shown by the
former towards the latter. Without which Atul Kumar may not have
The strong and repeated personal recommendations of Vinod Rai
IFel a diffused entity
The IFCI in a sense has been a kind of a mutant entity. Created
under the IFCI Act, 1948, the institution was a statutory
organization, and then this Act was repealed I 1993. Today the IFCI
is under the Companies Act and is non-banking finance company.
What makes it mutant is that the entity is neither government
controlled nor private. Broadly it is owned by shareholders i.e. by
members of the public (39%), banks and government institutions
Exchange to fill up gaps in the capital market and create value.
When asked whether the IFCI got into a bad deal, Atul Rai Said."
We are a different class of institution in terms of constitution of
MCX-SX banks for one category for whom certain percentages are
reserved. IFCI forms another category and there is an issue of how
the valuation is arrived at."
The second case pertains to alleged indulgence in gross
corruption and misuse of power by Atul Kumar Rai. In this case the
notice dated April 22, 2009 issued t the IFCI by the Registrar of
Companies, NCT Delhi and Haryana, called for an explanation from
the IFCI on various ir4regularities/allegations, appalling corruption
including the questionable acquisition of 17.4% per cent
shareholding of Rajus of the Satyam in MAYTAS Infrastructure.
Reports appeared in the media about how infamous Ramalinga
Raju dug a hoe in the IFCI by borrowing a loan of Rs. 85 crore after
pledging 10 lakh shares of the Satyam and the MAYTAS barely 72
hours before Raju confessed to irregularities in the Satyam.
The third case is about the sanction of RS.225 crore to Blue
Coast Hotels Ltd. This company's name has been put up the willful
defaulters list by the Reserve Bank of India
--
an appointee of the shareholders of IFCI. It seems he doesn't
of the Committee saying that he's not a Government employee and
Rajya Sabha member says, "He behaved undemocratically in front
ac:ed badly in front of the Committee evading all questions. This
allegedly misbehaving with a BJP leader from Bihar, he reportedly
being called upon by the Parliamentary Privileges Committee for
misbehaving with members of Parliamentary Committees. On
parliamentary bodies and institutions. Atul Rai is well known for
The fifth case shows Atul Rai's sheer disregard for
28,2001.
Ai.dit Committee of Directors of the IFCI at its meeting held on June
censure in two differe3nt cases. This position was also given to the
in a departmental Inquiry and was awarded punishment with
as Whole-time Director despite the fact that Mandai was indicated
been given two extensions besides elevating him on the IFCI Board
concerned should have superannuated in October 2008 but has
he officerto a tainted officer by the name of SK MandaI.
The fourth one pertains to repeated service extensions given
2002-03 to 2011-12.
package involving an assistance of Rs. 5,220 crore to the IFCI from
the IFCI. The Government of India has pout together a financial
and financial institutions are also major subscribers to the debt of
than 58 percent of the IFCI's shareholding. Public sector banks
the IFCI. However, the LlC, lOBI, GIC and PSU banks hold more
Board being diffuse its management has virtually hijacked this
public finance institution. The Government has no shareholding in
ostensibly a board-run corporate. Since the nature of the IFCI
(2B%) and Fils body corporate and other (33%). The IFCI is
,.
carpet once again.
or whether his objectionable conduct would be brushed under the
remains to be seen is whether a clean-u act would happen this time
and seems to be placed there dues to 'his "good contacts." What
let people speak up against him. Clearly, the CEO is not trusted
Atul Kumar Rai. He seems to rule IFCI with an iron fist and doesn't
There are many other cases proving that all is not well with
be sacked immediately".
also seems to believe that he is above the Government. He should
hoodwinked the Government to get appointed as IFCI head but
when he was called upon for questioning. He has not only
he behaved badly in front of a Standing Committee (Home Affairs)
~~\believe in Parliamentary Democracy and its procedures. Earlier too
hefty incentives causing serious financial burden on the institution etc.
irregularities in IFCI, decisions to reward himself by way of introduction of
indulges in serious corrupt practices involving various financial
the CEO & MD of IFCI flouting all the prevalent Rules and thereafter,
Companies Act in 1992, then abandons his Government job and becomes
favour of IFCI which was already converted into a company under
referred to as IFCI), ensures release of thousands of crores rupees in
Director in the Industrial Finance Corporation of India Ltd. (hereinafter
(DFS) Ministry of Finance and simultaneously functioning as Nominee
IES officer, who was working in the Department of Financial Services.
corrupt practice, wherein Shri Atul Kumar Rai (Respondent No.8), a 1985
petition is bringing to the notice of this Hon'ble Court a glaring example of
32 of the Constitution of India. The Petitioner by way of the present writ
1. That the present writ petition is being filed in public interest under Article
MOsr RE SFECTFULLYSHOWETH:
The Humble petition of the petitioner above-named
Hon'ble Supreme Court of India.
The Hon'bJe the Chief Justice of India and His Companion Justices of the
To,
AFPLlCA TIONFOR IN"ERIM DIRECTION
...RespondentsUnion of India & Ors
INersusl1
... PetitionerCentre for Public Interest Litigation
IN THE SUPREME COURT OF INDIA[CIVIL WRIT JURISDICTION]
WRIT PETITION (CIVIL) No of 2011
IN THE MATTER OF:
irregularities in the IFCI;
b) direct an immediate enquiry into all the allegations of financial and other
IFCI;
a) restrain Respondent No.8 from functioning as the CEO & MD of the
PRAYERS
accompanying writ petition:
Court may be pleased to pass the following orders during the pendency of the
In view of the abovementioned facts it is respectfully submitted that this Hon'ble
Debentures by converting the debentures into equity.
steps to enforce its investment of Rs. 523 crores in Optionally Convertible
in its favour without holding any major stake in it and also it must take
surviving provisions particularly when it has released such a huge amount
Government must exercise its control over the IFCI by virtue of the
bank is holding any major stake in IFIC. Therefore, it is high time that the
sector banks. It is pertinent hereto mention that no si"lgle public secotr
even though it is not holding any stake in it except through some public
money is at stake. The Govt. of India has invested huge amount in IFCI
allegations of financial irregularities as thousands of crores of public
3. Further, it is essential that an immediate enquiry is ordered into all
financial irregularities is permitted to cling on to such an important post.
Respondent No.8 who is facing serious charges of perjury and various
Even otherwise, public interest would be first casualty if perscn like
Moreover, his appointment is in total breach of rule and hence, illegal.
& MD of IFel as he can easily tamper with or destroy evidences.
interest, if Respondent No.8 is allowed to continue to function as the CEO
petition. It is submitted that irreparable injury would be done to the public
Petitioner has an excellent case and has every hope of succeeding in the
2. From the facts set out in the accompanying petition, it is clear that the
and inconsistent with whatever i"sslated herein below.
every contention of the Petitioners which is contrary to
<
Petition'and understood its contents. I deny each and
II. It is submitted that, I have perused the copy of the writ
present affidavit..
present case and am therefore competent to affirm the
am well aware o·r the facts and circumstances ot the
Respondent No.1 (c) In the abovementioned matter and
I. That I am the authorised representative of the
hereunder:
Government of India, do hereby solemnly state as
I, S. Gopal Krishna, son df Shri S. Sudarshan Rao, aged
about 41 years,. working as Under Secretary to the
AFFDIAVIT-IN-B_EPLYON_BEHALFOF RESPONDE.NTI
NO.1(.£}
...RESPONDENTSUNION OF INDIA & OTHERS
VIS
CENTRE FOR PUBLIC INTEREST LITIGATION
...PETITIONER
INTHEMATTEROF:
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
WRIT PETITION (CIVIL) NO. 355 OF 2011
.\.....~(9A/I
5{'2.!~0i!
.'
New DelhiDated:O~/7)C611/
(Prashant Shushan)Through: Counsel for the Petitioner
Petitioner
proper.
d) pass any other or further orders, as this Hon'ble Court may deem fit and
debentures into equity; and
crores in Optionally Convertible Debentures by converting the
direct the Government of India to enforce its investment of Rs. 523c)
,I
-"f \1-"'0-,.,
retirement from service w.eJ. 28.02.2007 citing person~1
grounds and requested to be relieved w.eJ. 28.2.2007._
Being the Cadre Controlling Authority of IES Officers his
request for VRS was forwarded to IES Division of the
Department of Economic Affairs on 07.02.2007 for approval.
Department of Economic Affairs conveyed cadre clearance
voluntary retirement i.a., 31.05.2007.
2· Shri Rai had given noticeo~r
Rule 48A of CCS (Pension Rules) seeking voluntary
Government Nominee Director till the date of his taking.21.8.2005. He continued on the Board of IFel limited as
Government • Director on the Board of IFel Limited on------financial institutions -including IFC!. He was nominated as
with operational, policy and budgetary matters relatin to
Cadre joined in erstwhile Banking Division (now Department
of Financial Services) as Director on 01.11.2002. Vide
order da~ was posted to Economic Adviser
(EA) and Industrial Finance (IF.I) Section, inter alia, dealing
1. Shri Atul Kumar Ra' who belong ed to IES
CEO &MD, IFCI :
retirement from Government Service and appointment as
Before adverting to parawise comments the deponent may
please be permitted to submit brief history In this case:
A. Background Note related to his voluntary
BRIEF HISTORY:
qn 1.6.2007.
from \the Government. The Matter was approved at the
competent level and the' approval was conveyed to Shri Rai
had sought permissionthe offer of IFCI Limited, Shri Rai
lrnited have offered him the post of Whole
Time \Director(WTD) on the Board of IFe!. In this regard, Shri
Rai Had submitted a copy of th . e~olution of the Board
meetihg of IFCI held 0 7thMarch, 2007. I order to acce ' ~
Rai vide his note3.
Notlflcatlon regarding VRS from Government Service of Shri
Rai 'was issued on 31.05.2007.i
permitted 10 take Voluntary Retirement w.e.f. 31.5.2007.
the approval of the then Finance Minister, Shri Rai was
2007 allowing Shri Rai to take VRS w.e.f. 31.05.2007. With
from Government Service w.eJ. 31.05.2007. Department of
Economic Affairs conveyed cadre clearance on 17thMay,I
30.4.2007 about the approval of VRS of Shri Atul Rai w.eJ.
31.5.2007. Shri Rai was informed, vide order dated
01.05.2007 by the Department that he would stand retired
datedO.M.videEconomic Affairs was informed
ofDepartmentAccordingly,w.e.f. 31.05.2007.
Session of Parliament, it was decided to relieve Shri Rai
whichever is earlier. However, in view of ongoing Budget
on . 26.04.2007 allowing Shri Rai to take VRS w.e.f.
30.04.2007 or on the date from whicb Shri Rai is relieved
Corporation 'of India (Transfer ofIndustrial Finance
Corporation of India Act 194§.._ Vide the
-------------------------Finance
1.1 . Industrial Finance Corporation of India was originally
established as a st-atutory Corporation under Industrial
Repeal of IFel Act, 19481.
B. Background Note related to Rep~al of tFel Act,
financial assistance to IFel and legal status of IFel :
examination of the Hon'ble Committee.
IFCI Ltd viz., Sh. Atul Rai, The matter [S still under
breach of priveleges on the alleged misbehavior by the CEO,
5. The Hon'ble Committee of Privileges (R.ajya Sabha) during
the appearance of Secretary (Financial Services) on ts"
Augu.st, 2010 had raised a number of issues in the matter of
r" June, 2007.
Rules, do not come in the way of considering his aPplicaljon.
Shrl Rai had submitted a declaration
that the factors mentioned in clauses(b) to (f) of ~he
amended sub-rule (3) of Rule 10 of the CCS (Pension)
application of a retired officer is considered, an undertakinq
from the retired officer is to be taken in form of an affidavit
provided vide DOPT O.M. dated the 5.12.2006, before an
instructions contained in Rule 10 of CCS(Pension) Rules as
is subject to the mandatory declaration. In terms of
4· The letter of approval mentioned that the approval
liabilities and the staff of IFCI will be transferred on such
businessand functionsof IFCI as well as all the assetsand
thought necessaryto establisha new company under the
Companies Act, 1956, to which the entire undertaking,
To deal with the problems and in particular,to ensure
greater flexibility and consequentability of IFCI to respond
to the needs of the fast changing financial system, it was
competitors.
This is considered anomalousas the two institutions are
role to its major shareholder, namely, the Industrial
DevelopmentBank of India in the functioning of the IFe!.
terms. Further, the Act also provides for a very dominant
thereby prevents it from raising resources on competitive
only when it is backed by a Governmentguarantee, and
the years as also the changesin the past severalmonthsin
the financialsector havemade it obligatoryfor the Industrial
Finance Corporation of India (IFCI) to raise resources
largely from the market. However, the Industrial Finance
CorporationAct, 1948 permits accessibility to the market
"Continueddecline In the availabilityof concesslonslfunds
from the Governmentand the ReserveBank of India, over
Undertaking and Repeal)Act~c Act of 1~slrepealedandCorporationwas converted into a Company.
The basic objectiveof the RepealAct as indicatedin the
Statement of ObjectsandReasonswas as under:
» A GoM comprising of Minister of Finance and Company
Affairs, Minister of Disinvestment and Dy. Chairman,
Planning Commission was formed vide order dated
16.07.2002 to work out restructuring package for UTI, lOBI
and IFC!. It was the policy view in the GeM that because of
the perceived nature of IFel as the Government institution,
to protect the public interest, liabilities will have to be taken
care of in the same manner as UTI.
2.1. As on March 3.1, 2002, IFel had accumulated losses of over
Rs 1100 crore with net worth standing at negative Rs 31
crore. Non-performing assets stood at 32% officially and at
60% according to a consultant's study.
2. A Note on Financial Assistance:
day as .will be notified by the Central Government.
Conversion of IFel into a Company would also enable it to
reshape its business strategies, provide greater autonomy,
enter the capital market for raising resources, facilitate
expansion of Its equity base in future, and create a more
levelled playing field across broadly similar financial
institutions."
and UTI.
the equity of IFel was held by public sector institutions and
nationalized banks and 6.6% by S81 and subsidiaries of S81
dated 12.11.2002 for the Cabinet on the issue of IFC:_:-I_~
2.3. On the basis of recommendations of GoM, a status note
• Government's direct expenditure may be minimized.
• The status of the institution as Public Financial
Institution should be withdrawn.
alloW"themto increase.
• Fencing· of protected interest liabilities so as not to
intervention.
• Government assistance will be a one time
in Government guarantees.
Investors, Charitable Institutions, etc. which invested
individuals,' Provident Funds, Foreign Institutional
• There will be no 'bail out'. Rather, Government
assistance will be confined to meet the liabilities to
are summarized below:
assistance to Public Financial Institutions. These guidelines
had outlined basic principles for providing government
2.2. Therefore, in consultation with RBI, in 2002 the Department
to time.
additional terms and conditions as may be set out from time
of IFCI, the Government may seek specific compliance to
• In the interest of securing the interest of stakeholders
31, 2003 or otherwise to top rated corporate clients only.
cases where exposure has been undertaken prior to March
Fresh sanctions and disbursals would be restricted to
2002 and December 2, 2002.
finalized in the meeting of stakeholders as on November 26 J
restructuring of debt liabilities as envisaged in the package
March 31, 2003 except on account of rolling over and
liabilities over and above Its outstanding position as on
IFel snould not incur fresh borrowings/deposit•
conditions have been stipulated :-
3.1. While issuing sanction for grants to IFCI, the following
(Rs in crore)51 Financial Amount Amount ActualNo. Year finalized as provided in Release
per the the Budgetoaekage .c> "'"1. 2002-03 523.00 523.00 ( 523.007
2. 2003-04 1573.00 1573.00 ~.vO3. 2004-05 226.00 316.00 316.004. 205-06 225.00 300.00 300.005. 2006-07 225.00 225.00 221.316. 2007-08 1300.00 1300.00 --------7. 2008- 09 186.00- I-
8. 2009-10 - 168.009. 2010-11 147.00 I___.,.:::::: :::::::,10. 2011-12 647.00 v..,.11. Total 5220.00 4237.00( 2932.31. \. ---.z>:
3. As per the restructuring package approved by the
Cabinet in its meeting held on 17th February, 2005 the
amount of assistance provided to' IFel Ltd. is as under-
form of a loan with the right to recompe
rest as grant. _
performance '~ not to introduceschemeslESOP.
c. not to make fresh recruitment; and
b. to introduce VRS
a. to expedite the plan for transfer of assets to ARCand report from NPAs In relation to the targetsset for the FY 2003-04;
• In addition to the foregoing, it is immediately enjoined
upon IFCI;
• Recovery from NPAs by means other than throughsale/transfer to ARC would be stepped up in line with the
target for reduction in NPAs.
• The Board of (FCI would set a target as regards theamount of assets to be transferred by IFel to ARC for thenext three years beginning 2003-2004.
• IFel would reduce its percentage of net NPAs to nat
advances from 22% at the end of FY 01-02 to 9% by end of
FY 04,·05.
• Reduction in the strength of personnel at the rate of
5% points per annum.
• A monthly report on compliance would be submitted to
Additional Secretary (FS) each month.
..
(c) IFel is a Public Limited Company and Govt. does not
have any share holding in its. Around 20% of its
share are held by banks/insurance companies, that
too in the nature of investments. The day to
day functioning of the company is carried out by
professionals. Thus, the Govt. having no financial
interest in the company has no reason to provide
grants to a Public Limited Company, especially
when it is able to repay its committed liabilities.
(b) IFCI is able to pay Its liabilities on its own In view of
the improved financial condition and does not require
the Govt.'s grants for the purpose.
3.3. There was a provision of Rs. 1300 crore in the budget
for 2007-08. It was, however, decided that the grant for the
year 2007-08 and grants in future would not be provided to
IFel for the following reasons:
(a) The financial condition of IFel has considerably
improved in the year 2006-07 and it has shown a
profit of Rs. 898 crore as against a loss of Rs. 74
crore in 2005-06. IFCI Is likely to make considerable
recoveries out of its NPAs which would result in a
strong bottom-line for 2007-08 as well. This is also
reflected in its share price (face value Rs.10) which
currently is ruling at around Rs. 60/- as against Rs.
10-12 almost a year ago.
Outstanding Guarantees as on 31.03.2011 (P. 738/c)1. ~ ua rantees on Ru:>ee Term Loa n 2270.21
~ F oreig n currency loan s (LC of KtNl 526.85;
Total 2797.06
iii)
2003-04 Grants- in··Aid - 1573.002004·05 Grants- in-Aid 316.002005·06 Grants- in-Aid 300.002006·07 Grants- in-Aid 220.31
Total 2409.31
ii) Grar\S-i roc1id
us an mg oans2001- 9.7fflo Convertble Debentures of 20 years 40002 rnaturlno in 202 12002- Loan In the form of Optionally Convertible 52303 Debe ntCPs with a right to recompense at par
~a turing i,.?023 }Total ...",,,,
-V--"'v
i) 0 t t d' L(Amount in Rs. Crore)
on 31.03.2011 are as under:
provided by the Govt. to IFCI and outstanding guarantees as
had been a party thereto. The details of financial assistance
undertaking of the Corporation has vested by virtue of this
Act and enforceable as fully and effectually as if Instead of
the Corporation the Company had been named therein or
effect against or In favour of the Company in which the
against the Corporation and shall be of as full force and
Corporation shall cease to have effect or to be enforceable
immediately before the appointed day and affecting the
other instruments and working arrangements subsisting
all contracts, deeds, bonds, guarantees, powers of attorney,
3.4. In terms of Clause (3) of Sect.lon 4 of Industrial Finance
Corporation (Transfer of Undertaking and Repeal) Act, 1993,
~ Attorney General of India recordinq in his legal opinion on
status of IF.CI has opined that IFCI constitutes 'state' under
Article 12 of the Constitution. Government ha~xtensive
~2. The Committee on privileges, in the context of the hearing
the officials of this Department has sought I~gal opinion of
Ministry of Law and Justice on the legal status of IFCI. ~
budgetary control on the running of IFCI.
• Govt. has no pervasive control over IFel and exercises no
Board of Directors.
• GOI has n~oshareholding in IFe!.
• IFCI is a company registered under Companies Act, 1956
and the affairs/business of !Fe! Ltd are managed by its
cases, Parliament questions and VIP references to the effect
that:
4.1. In the recent past, based on the sharehotding position of
IFel, a view had been taken by the Govt. with regard to court
IFel, there is a provision for the appolntment by the
Government of two Directors on the BOard of the company
so long any amount remains outstanding against loans,
guarantees or any other facility directly or indirectly provided
by the Government of India.
As on date there is no shareholding by the Government in
IFel. As per the Article 124(1)of the Articles of Association of
4. Legal statys of IFel
..
Act' through 'Industrial Finance Corporation (Transfer
b. < In the year '1993, the Parliament repealed the '1948
year
Assets & Liabilities etc. before the Parliament every
obligation on the 'Corporation' to place its annual
accounts, audited reports and also its statement on
a Government controlled entity, there was an
Corporation Act, 1948. As a statutory Corporation and
of Parliament known as the Industrial Flnance
Initially set up as a Statutory Corporation under an Act
a. The Industrial Finance Corporation of India was
4.4. IFCI in its reply dated zs" July, 2011 has stated that
11(2) of IFel Repeal Act, 1993.
~ In view of the opinion of Attorney General of India, the
matter was taken up with IFCI for compliance to Section
powers that can be exercised generally.
are to be exercised in relation to IFel only. They are not
from the particular statute by which IFel was created and
partlcutar to IFel because the powers of such control flow
the Central Government over IFCI's operations is a
the management of IFC!. The deep and pervasive control of
nominates two Directors on IFCI's Board who playa role in
IFel's [because of Section 11(2) of the 1993 Act], and it
paragraph 1 of the p$tition are matter of record and
2 Ii is stated that some of the statements made in the
exemplary ·cost.
and deserves to, be dismissed withquestionof law
involve any question of law much less any, substantial
1. At the. outset, I stetG thlt. the pr.. ent PetJ1fof\dot. nC\t
PARAWlse REPLY:
of Law.
Hence, it did not agree to the vjews ofMJnisby
Ie '. ompany.
'COI\PORA rION' before tht Parliament and not the
to the annual accounts of therefers,
d. Section 11 (2) o'f the Repeal Act referred to by DFS
regh:;tered under the Companies Act, 1956.
Corporation of India Limited' to be formed and
"Company" SQ as to mean the 'lndustrial Finance
Industrial Finance Corporation of India'" and
It may be noted that 'CQrporatlon' has been defined
in Section 2 of the Repeal Act 60 a6 to mean "The
c
corporation get 'transferred to a 'Company'
incorporated under the Companies Act, 1956.
"
of Undertaking and Repeal) Act, 1993 and accordingly
all the assets and liabilities of the erstwhile
'commercial transactions of IFCI they were referred
affairs of IFC!. Since these matters related to
various complaints received In this Department on the .~
such decisions. These matters were raised in
management and Government has no role in
transactions of IFel which were taken by its
of the petition relate to commercialparagraph 4
5. It is stated that the some statements made in the
no comments of Respondent No.1 (c)., ,
3 of the petition is a matter of record and needs
4. It is stated that the averments made in the paragraph
1(c).
therefore, needs no comments for Respondent No.
3. It is stated that the averments made in the paragraph
2 of the petition regarding application of Shri Atul Rai
for voluntary retirement Is a matter of record and
information was available.
Department and replies have been sent wherever the
Members of Parliament have been examined In the
r-----_
allegations regardil1g corrupt practices involving
various financial irregularities in IFel relatee;r~-,IFel which require no comments. The
representations received by the Government from
~/1(c). Therequire no comments of Respondent No.
•
associates with hefty amount of incentives.
within the knowledge of answering respondent that
Shri Atul Rai in this rewarded himself along with his
however, it is notIncentive for the officers of IFCI,
Linked Incentive I ESOP. It is not denied that IFel Ltd
those related to introduction of Performance
2007. These terms and conditions do not include
Linkedintroduced a scheme of Perlo ance
releasing the grants to IFel in the year 2006~
Department whilethe sanction letter of this
revised terms and conditions were incorporated in
irrelevant. Accordinglythe time line is now
up as either the results have been achieved or else
was opined by the Department that some of the
Terms and conditions of sanction need to be cleaned
grant of IFel in the year 2006~07 itreleasing the
needs no comments of Respondent No. 1(c), While
5 of the petition is a matter of record and therefore,
q It is stated that the averments made in the paragraph
action.
Inspection by Reserve Bank of India for necessary
Company and being subjected to Annual Financial
Reserve bank of India as IFel being registered with
them as systemically important Non Banking Finance
3\Dto Ministry of Corporate affairs and also to
. over the Company.
control .and interest of the Central Government
companies incorporated under the Companies
Act, 1956 and underscores the substantial ~
,Company's financial audit continue to apply.
This peculiarity distinguished IFel from other
Government to exercise control over the
of the 1948 Act that empowered the Central
has also been observed that by virtue of Section
11(2) of the Repeal Act of 1993, the provisions
Article 12 of the Constitution of India. Further, it
Also IFCI can be brought under the ambit of
in IFel and IFCI is instrumentality of the state.
the Government of India has substantial interest
IFC!. The Attorney General of India while
rendering his legal opinion has observed that
legal status of
legal opinion of Ministry of Law regarding
Parliament by ceo & MD, IFel, has sought
Member of
the issue related: to breach of privileges of
7.(a) The Committee on Privileges while examining
paragraph 6 of the petition are matter of records and
following factual position Is furnished:-
'5\ \7. It is stated that some of the averments made in the
the erstwhile corporation get transferred to a
through 'Industrial Finance Corporation
(Transfer of Undertaking and Repeal) Act, 1993
and accordingly all the assets and liabilities of
1993, the Parliament repealed the '1943 Act'
before the Parliament every year. In the year
also its statement on Assets & Liabilities etc.
place its annual accounts, Audited reports and
there was an obligation on the 'Corporation' to
Corporation and a Government controlled entity,
Corporation Act, 1948. As a Statutory
...Parliament known as the Industrial Finance
corporaton of India was initially set up as a
Statutory Corporation under an Act of
7.(c) IFCI opined that 'the Industrial Finance
years.
Liabilities, Profit and Loss Accounts, etc. as
provlded in the Section' 11(2) of the Repeal Act,
1993 for placing the same before Parilamsnt.
The company was also requested to clarify as to
why the relevant sections of the Repeal Act
have not been complied with during the past
the Audit report, Statement of Assets and
General of India, !Fel was requested to forward
7. (b) In the context of legal opinion of Attorney
.... _..-.-~
•
s a loan to the IFelamounting
any, may be ordered by the respective regulatory
agencies. ~
Therefore, investigation into financial irregularities, if
Corporate Affairs, RBI, SEBI, NSE and SSE.
comes under the regulatory purview of Ministry of
As such itexchanges.and listed with stock
important NBFCsystemicallyregistered as
the Companies Act, 1956, it is also4(A) of
.".
8 It is stated that IFel is a Public Limited Company and
Notified as Public Finance Institution under Section
views of Ministry of Law.'
the 'Company'. Hence, IFel did not agree to the
'CORPORATION' before the Parliament and not
refers to the annual accounts of the
11(2) of the Repeal Act referred to by DFS
the Companies Act, 1956. Section
India Limited' to be formed and registered under
mean the 'Industrial Finance Corporation of
Corporation of India" and "Company" so as to
so as to mean "The Industrial Finance
Act, 1956. It may be noted that 'Corporation'
has been defined in Section 2 of the Repeal Act
'Company' incorporated under the Companies
Corporation Act, 1948 permitted accessibility to the
market only when it was backed by a Government
guarantee, and thereby preventeci it from raising
resources on competitive terms. Further, the Act also
provided for a very dominant role for its major
shareholder, namely, the Industrial Development Bank
from the market. However, the Industrial Finance
Reserve Bank of India, need for IFel to raise capital
of concessional funds from the Government and the
enacted due to continued decline in the availability
comments of Respondent No. 1(c). In terms of
Statement of Objepts and Reaso':ls, the tnduetrla'
Finance Corporation of India Repeat Act, 1993 was
petitioner in the paragraph 9 of the petition require no
10. It is stated that in respect of averments made by the
8 of the petition is a declaration by the petitioner and
require no comments of Respondent No. 1(c).
It is stated that t.heaverments made in the paragraph9
otherwise may be taken at an appropriate time.
ordecision by the Government on i1s conversion -recompense on at par with other stake holders and a
of interest being 0.1% per annum with a right to
Convertible Debentures of twenty years with the rate
form of Optionally
granted during the year
restructuring of IFCI in the
forward the Audit Report, .statement of Assets and
Attorney General of India, IFCI was requested to
11. In reply to the paragraph 10 of the petition, It is
submitted that in the context of legal opinion of
institutions.
more level playing field across broadty similar financial
expansion of its equity base In future, and create a
enter the capital market for raising resources, facilitate
its business strategies, provide greater autonomy,~~
Central Government. It was also felt that conversion of
IFCI into a Company would also enable it to reshape
transferred on such day as will be notitied by the
assets and liabilities and the staff of IFel were to be
Companies Act, 1956 to which the entire undertaking,
business and functions of IFCI as well as all the
necessary to establish a new company under the
the fast changing financial system, It was though
consequent ability of IFel to respond to the needs of
and in particular, to ensure greater flexibility and
with these problemsdealcompetitors. To
considered anomalous as the two institutions were
of India in the functioning of IFCI. This was
.~
Corporation of India Limited' to be formed and
registered under the Companies Act, 1956. Section
11(2) of the Repeal Act referred to by DFS refers
to the annual accounts of the 'CORPORATION'
"Company" so as to mean the 'Industrial Finance
"The Industrial Finance Corporation of India" and
defined in Section 2 of the Repeal Act so as to mean
1956. It may be noted that 'Corporation' has been
a 'Company' incorporated under the Companies Act,
liabilities of the erstwhile corporation get transferred to
Parliament repealed the '1948 Act' through 'Industrial
Finance Corporation (Transfer of Undertaking and
Repeal) Act, 1993 and accordingly all the assets and
Parliament every year. In the year 1993, the
statement on Assets & Liabilities etc. before the
Corporation and a Government controlled entity,
there ~as an obpgation on the 'Corporation' to place
its annual accounts, audited reports and also its
Corporation Act, 1948. As a StatutoryFinance
known as the Industrialan Act of Parliament
Initially set up as 2!\ Statutory Corporation under
placing the same be"foreParliament. IFCI opined that
'the Industrial Finance Corporation of India was
in the Section 11(2) of the RePeal Act, 1993 for
Liabilities, Profit and Loss Account, etc. as provideu
.--'---
17. It is stated that the averments made by the petitioner
in the paragraph 16 of the' petition are matter of record
and require no comments of Respondents No.1 (c).
1(c).
16. It is stated that the averments made by the petitioner
in the paragraph 15 of the petition are matter of
record and require no comments of Respondents No.
15. It is stated that the averments made by the petltlol1er
In paragraph 14 of the petition are matter of record
and require no comments of Respondents No.1 (c).
and require no comments of Respondents No. 1(c).
in paragraph 13 of the petition are matter of record
14. It is stated that the averments made by the petitioner
13. It is stated that the averments made by the petitioner
in paragraph 12 of the petition are matter of record
and require no comments of Respondents No.1 (c).
12. It is stated that the averments made by the petitioner
in paragraph 11 of the petition are matter of record
and require no comments of Respondents No. 1(c).
before the Parliament and not the 'Company'. I-ience, _
it did not agree to the views of Ministry of Law.'
currency borrowings of IFel and IFel's liabilities
to retail investors. Under the package, a total amount
of Rs.2933.31 crore was released to IFel as per the
details given below:
foreignGovernment guaranteed SLR bonds,
oninterestpartthe Government Inctuded
20 . It is stated that the averments made by the petitioner
in the paragraph 19 of the petition are matter of
record. It may be pertinent to note that a financial
package for IFel was formulated in December
2002 by Govt. of India. To avoid any systemic
crisis, GOI in consultation with public sector
banks and financial institutions worked out a package
in 2002-03, which included financial assistance of
Rs.5220 crore to IFel over the period from 2003 to
2011-12. The liabilities taken over or assumed by
19. It is stated that the averments .made by the petitioner
in paragraph 18 of the petition are matter of record
and require no comments of Respondents No.1 (C).
18. It is stated that the averments made by the petitioner
in paragraph 17 of the petition are matter of record
and require no comments of Respondents No. 1(c).
in paragraph 21 of the petition are matter of record
and require no comments of Respondents No.1 (c).
21. It is stated that the averments made by the petitioner
1(c).
record and require no comments of Respondent No.
21. It is stated that the averments made by the petitioner
in the paragraph 20 of the petition are a matter of
81. Financial Amount Amount ActualNo. year finalized as provided in Release
per the the Budget_. package ---1. 2002-03 523.00 523.00 523.00
2. 2003..04 1573.00 1573.00:-
1573.00
316.00 -3. 2004-05 226.00 316.00--_ -4. 200,5-06 225.00 300.00 300.00
- - .--- -.-5. 2006-07 225.00 225.00 221.31
6. 2007-08 1300.00 1300.00 ...._ ...__ ,.-......__ .
7. 2008..09 186.00,-
S. 2009-2010 168.00
9. 2010..2011 147.00
10. 2011-2012 647.00 II
11. Total 5220.00 4237.00 2933.31
(Rs. in crore)
0\)
No.1 (c),
record and requires no comments of Respondent
a matter ofemployment was processed. It Is
request for seeking post retirement commercialI
28. It is stated that the averments made by the petitioner
in the paragraph 27 of the petition refers to file nptings
where the request for VRS of Shri Atul Rai and his
27. It is stated that the averments made by the petitioner
In paragraph 26 of the petition are matter of record
and require no comments of Respondents No. 1(0).
and require no comments of Respondents No.1 (c).I
26. It is stated that the averments made by the petitioner
in paragraph 25 of the petition are rnatter of record
and require no comments of Respondents No.1 (c).
25. It is stated that the averments made by tile petitioner
in paragraph 24 of the petition are matter of record
and require no comments of Respondents No. 1(c).
and require no comments of Respondents No.1 (c).
24. It is stated that the averments made by the petitioner
in paragraph 23 of the petition are matter of record
23. It is stated that the averments made by the petitioner
in paragraph 22 of the petition are matter of record
and require no comments of Respondent No.1 (e).
in the paragraph 34 of the petition are matter of record
35. It is stated that the averments made by the petitioner
No.1 (c) as it pertains to internal affairs of IFe,"
33 of the petition require no comments of Respondent
34. It is stated that the averments made ih the paragraph
of the petition require no comments o~ Respondent
No.1 (c) as it pertains tolnternat affairs of IFe!.
33. It is stated that the averments made In paragraph 32
require no comments of Respondent No.1 (e).
in paragraph 310f the petition are matter of record and
32. It is stated that the averments made by the petitioner
31. It is stated that the averments made in the paragraph
30 of the petition require no comments of Respondent
No.1 (c) as it pertains to internal affairs of !Fe!.
30. It is stated that the averments made In the paragraph
29 of the petition require no comments ·ofRespondent
No.1 (0) as it pertains to hiternal affairs of lFel.
1(c).
record and require no comments of Respondent No.
39-\29. It Is stated that the averments made by the petitioner
in the paragraph of 28 of the petition are. matter of
•
raised in the representation forwarded byissues
management to the Government of India. The
management and accountability of IFel
in purchase of 5% stake in MCX·SX by IFel
Association regarding alleged gross irregularities
Employees'CorporationIndustrial Finance
Shri Madan Lal, General Secretary of All India
forwarding therewith a copy of the representation of
Rajendra AgarwalSingh Kesaria, Shri
Shri Ashok Argal, Shrl NarayanaKumar Rawat,
Parliament, namely, Shrl Brajesh Pathak, Shrl Ashok
been received from the following Members of
38. In response to the averments made In the paragraph
37 by the petitioner, I state' that the letters have
Respondent No.1 (c).
paragraph 36 of the petition require no comments of
37. I sate that the averments made by the petitioner in the
and require no comments of Respondent No.1 (c).
salary drawn by Shri Atul Rai is a matter of record
affairs of IFCI and rest of the averments regarding
comments of the respondent as it pertains to internal
the paragraph 35 of the petition require no
36. It is stated that the some of the statements made in
management to the Government of India. The issues
JFCI management and accountability of IFel
irregularities in purchase of 5% stake in MCX-SX by
Employees' Association regarding alleged gross
of All India Industrial Finance' Corporation
representation of Shri Madan Lal, General Secretary
therewith a copy of theRawat, forwarding
40. In response to the averments made in the paragraph
39 by the petitioner, It is submitted that the letter
has been received from the Shrl Ashok Kumar
No.1 (c).
and require no comments of Respondent
in the paragraph 38 of the petition are matter of record
It is stated that the averments made by the petitioner39
December, 2009 respectively.
Shri Brajesh Pathak, MPs In response to their
letters dated 7th December, 2009. And replies to
Shri Ashok Argal and to Shri Vlrender Kashyap
have also been sent on 04th June, 2010 in response
to their letters dated 1St!'December, 2009 and 26th
May, 2010 to Shri Ashok Kumar Rawat and to
also been sent onFurther, replies have
10th August, 2011.vide letter NO.11/3/2010 on
and a reply was sent to the Members of Parliament
~~~
the Hon'ble Members of Parliament were examined
require no comments of Respondent No.1 (c).
44 of the . petition are matter of record and
45. It is stated that the averments made in the paragraph
IFel.
43 of the petition require. no comments of
Respondent No.1 (c) as it pertains to internal affairs of
. 44. It is stated that the averments made in the paragraph
require no comments of Respondent No.1 (c).
paragraph 42 of the petition are matter of record and
43. I state that the averments made by the petitioner in the
IFel. ..
Respondent No.1 (c) as it pertains to internal affairs of
41 of the petition require no comments of
42. It is stated that the averments made in the paraqraph
affairs of IFe!.
pertains to internalRespondent No.1 (c) as it
of the petition require no comments of
41. I state that the statements made in the paragraphs 40
(Expenditure & Financial Services) vide letter
NO.11/3/2010 on 10thAugust, 2011.
Narayan Meena, the Minister of State for Finance
. d i th 3~raise In e representation forwarded by the Hon'ble
Member of Parliament were examined and a reply was
sent to the Member of Parliament from Shri Namo
Hon'ble Member of Parliament relate to conduct of
dated 08.08.2011 that as the issues raised by the
record. A copy of the said letter was also received
in this Department on 16.02.2011. The issue was
taken up with ,lFel who had reported vide letter
in the paragraph 50 of the petition are matter of
51. It is stated that the averments made by the petitioner
require no comments.of Respondent No.1 (c).
49 of the petition are matter of record and
50. It is stated that the averments made in the paragraph
49. It is stated that the averments made in the paragraph
48 of the petition are matter of record and require
no cOmmentsof Respondent No.1 (c).
no comments of Respondent No. 1(c).
47 of the petition are matter of record and require
48. It is stated that the averments made in the paragraph
47. It.is stated that the averments made in the paragraph
46 of the petition are matter of record and require no
comments of Respondent No.1 (c).
affairs of IFe!.
Respondent No. 'I (c) as it pertains to internal
45 of the petition require no comments of
46 It is stated that the averments made in the paragraph
the best of the department's knowledge.
and the contents of the same to be true and correct to
No.1 (b) and 1(c) to which the deponent has access
is based on the records available with the Respondent
55 It is stated that whatever has been stated hereinabove
information was available.
including several Members of Parliament wherever
complain.antstoand replies have been sent
Complaints have been examined by the Department
in the paragraph 53 of the petition are denied.
54. It is stated that the averments made by the petitioner'"
No.1 (c).
53. It is stated that the statements made in the paragraph
52 of the petition require no comments of Respondent
and facts of the statement are not denied.
in the paragraph 5'1 of the petition are matter of record
52. It is stated that the averments made by the petitioner
same and is taking necessary action.
note of the17.10.2011 and Board has taken
onheldplaced before the Board in its meeting
CEO & MD, IFel, it is necessary that the matter be
subrnltted jo the Board of IFel for their consideration.
It has been further informed that the matter has been
DePONENT
Verified at New Delhi on this the_ day ofNovember, 2011
ccneealed therefrom.
knowledge, no part of It is fatse and nothing material has been
contents of foregoing affidavit are true and correct to my
I, the deponent above named do hereby verify that the
VERIFICATION
DEPONENT
-based on conjectures and surmises.
&ubmitted thet the said petition may be. dlamlseed wtth cost
since it does not raise any substantial qveation of law and is
, ,56. In view of the aforesaid facts and circumstances, it is
