The company wants to verify that even though you failed, you have participated with your best efforts in the exams. A failed mark sheet is an indication of your attendance at the exam. It is also an indication of your sincerity to attend the curriculum, and that you were not banned or something from the university for that particular exam.
It is understandable that in frustration of failing an exam, or in the happiness of passing the next semester, you might have thrown away the failed mark sheet; but that mark sheet defines one year/semester in your educational life. Losing it would mean losing that semester officially from your life.
This might be the first time, but surely will not be the last time you will be asked for that mark sheet. Please try to obtain a duplicate from the university. The university-provided original mark sheet is your property and no college would ask you to submit it for any reason. They only ask for submission of the original if they are going to replace it with the reverification of marks. If there was a re-exam, then they do not take it back. Also, they could not deny if you ask for a duplicate of the same.
On another note, my sincere request to you is not to become hyper/cynical about this matter. Nobody would ask you for a failed marriage, as that is not the criteria for obtaining your job (unless you apply to work with a marriage bureau or a marriage counselor). Your employer hires your services based on your academics, and if they are interested in knowing about the missing semester results in your academics, then there is nothing wrong with that. As I said before, this is not a conspiracy to frame you like the Delhi minister example you have given.
Also, FYI, the American embassy is not the standard for Indian organizations to set their rules. For example, the American embassy asks for a birth certificate with the proper 'name' mentioned on it for work permit applications, while Indian organizations accept ones with just 'Boy/Girl' mentioned. These are different local rules. You cannot judge these organizations by comparing them like this.
If your anger is temporary, then it is okay, but if you continue this tone/attitude towards the suggestions, then I doubt anybody on this forum would be able to help you further. They will respond but may not be able to help.
Best Regards,
Amod Bobade.