Hello Ranjit,
is the system ID used as the MSKEYVALUE in IdM? Could you provide a screenshot from IdM with a test-identity to show, what the status is and what you expect to change?
In our IdM, when an employee gets a new employee-number (e.g. he changes from extern to intern), that will create a new identity in IdM with that new number as MSKEYVALUE and the old ID will be set to inactive (in HR and IdM).
But maybe you mean something else by "system ID", so I'm a bit confused right now. 
Regards,
Steffi.