Public financial institution status survives statutory transfer, allowing enforcement under SARFAESI and preserving security interest rights.

Institutions expressly named in section 4A(1) of the Companies Act, 1956 retain their status as public financial institutions independently of the proviso to section 4A(2). A transfer of undertaking under a saving provision does not extinguish the statutory benefits attached to the original institution, and the 1995 notification supported continued recognition of the entity as a financial institution. On that basis, the respondent remained entitled to invoke the SARFAESI Act and enforce its security interest; the challenge to the High Court's orders was rejected.

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Issues: Whether the Industrial Finance Corporation of India Limited continued to be a public financial institution for the purposes of section 4A of the Companies Act, 1956 and was therefore entitled to invoke the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Analysis: Section 4A(1) of the Companies Act, 1956 independently declares the specified institutions, including the Industrial Finance Corporation of India, to be public financial institutions. The restriction in the proviso to section 4A(2) governs only institutions notified under sub-section (2) and does not control the institutions already named in sub-section (1). The conversion of the Corporation into a company under section 5 of the Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993 did not divest it of the status and benefits attached to the original institution, since the provision operates as a saving clause transferring the earlier benefits to the new company. The notification issued in 1995 also supported the continued recognition of the respondent as a financial institution.

Conclusion: The respondent continued to be a public financial institution and was entitled to proceed under the SARFAESI Act; the challenge to the High Court's orders failed.

Final Conclusion: The appeal was dismissed, and the High Court's view that the respondent could enforce its security interest under the statutory framework was left undisturbed.

Ratio Decidendi: Institutions expressly named in section 4A(1) of the Companies Act, 1956 remain public financial institutions independently of the proviso to section 4A(2), and a transfer of undertaking under a saving provision does not extinguish that statutory status.

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