Delhi Development Authority And ... vs Union Of India (Uoi) And Anr.
2006 Latest Caselaw 2162 Del

ORDER

1. This writ petition by the Delhi Development Authority ('DDA') against the Union of India seeks to challenge an order dated 9.9.2005 issued by the Additional Commissioner of Income Tax, Range 32, New Delhi requiring the petitioner to get the accounts of the DDA audited as per the provisions of Section 142(2A) of the Income Tax Act, 1961 ('Act').

2. On 5.10.2005, this Court directed notice to issue in this writ petition and stayed further proceedings in the meanwhile. On 25.7.2006, this Court directed the learned Counsel for the parties to find out whether the dispute raised in the case is referable to the Committee on Disputes (COD). In the meanwhile, the respondents filed an application being CM 9291 of 2006 on 27.7.2006 seeking extension of time for completion of assessment since the limitation would be expiring by 28.7.2006. On 31.7.2006 this Court directed notice to issue in the said application.

3. On 13.9.2006 the learned Counsel for the DDA-petitioner sought further time to find out whether the COD clearance was required in the present case. This Court clarified that "time spent in this litigation will not be counted towards the period of completion of assessment."

4. Mr. Sandeep Sethi, the learned senior counsel appearing for the petitioner states that while the COD clearance has not been applied for in the present case, no such application is in fact called for since according to him the dispute is frivolous. In support of his submission, he placed reliance upon the judgment of the Hon'ble Supreme Court in Canara Bank v. National Thermal Power Corporation (2001) 1 SCC 43.

5. We are unable to agree with the contention of the learned Counsel for the petitioner. The judgment of the Hon'ble Supreme Court in Oil & Natural Gas Commission v. Collector of Central Excise (1994) 116 CTR (SC) 643 has mandated that the disputes between the different departments of the Central Government as well as those between the Government on the one hand and Government Bodies and Public Sector Undertakings on the other, should be first referred to a High Powered Committee (presently the COD. The Hon'ble Supreme Court has further explained in the said judgment in ONGC (supra) as under:

i) The referring of disputes to the High Powered Committee is not with a view to effacing the statutory remedies available to the departments of government or the PSUs;

ii) The idea is to explore the possibility of having them resolved through an in-house ADR process before the disputes reach the court or Tribunal or are taken up by them for adjudication;

iii) In the event the dispute is unable to be resolved by the High Powered Committee, it shall grant the clearance for the litigation in the Court or Tribunal as the case may be.

iv) Where there is the possibility of the appeal or petition becoming time barred, it will be open to the party concerned to file such appeal or petition within the time prescribed even before obtaining clearance.

v) However, the party shall within a month of such filing, approach the High Powered Committee for clearance, with prior notice to the designated authority in the Cabinet Secretariat of the Government of India authorized to receive notices in that behalf.

6. Thereafter in Mahanagar Telephone Nigam Limited v. Chairman, CBDT , the Hon'ble Supreme Court, reiterated the mandatory nature of the clearance that has to be given by the COD for filing of a petition in the Court by the concerned Government Body or Public Sector Undertaking. In particular, the Hon'ble Supreme Court observed as under:

If it can, the High-Powered Committee will resolve the dispute. If the dispute is not resolved the Committee would undoubtedly give clearance. However, there could also be frivolous litigation proposed by a department of the Government or a public sector undertaking. This could be prevented by the High-Powered Committee. In such cases there is no question of resolving the dispute. The Committee only has to refuse permission to litigate. No right of the department/public sector undertaking is affected in such a case. The litigation being of a frivolous nature must not be brought to court. To be remembered that in almost all cases one or the other party will not be happy with the decision of the High-Powered Committee. The dissatisfied party will always claim that its rights are affected, when in fact, no right is affected. The Committee is constituted of highly placed officers of the Government, who do not have an interest in the dispute, it is thus expected that their decision will be fair and honest. Even if the department/public sector undertaking finds the decision unpalatable, discipline requires that they abide by it. Otherwise the whole purpose of this exercise will be lost and every party against whom the decision is given will claim that they have been wronged and that their rights are affected. This should not be allowed to be done.

7. We find that the decision in Canara Bank (supra), which was prior to MTNL (supra) turned on its own facts. The Hon'ble Supreme Court was of the view that the disputes there "does not appear to be a genuine dispute between the Government of India undertakings." It has further held that "the real litigation in that case was between the Mutual Fund and NTPC and not between the two undertakings." It was in those circumstances that it was held that the ONGC (supra) judgment would not apply.

8. However, in the present case, the DDA is a statutory authority, the Chairman of which is the Lieutant Governor of Delhi and the controlling Ministry of which the Ministry of Urban Development, Government of India. It is also not possible to come to any conclusion at this stage that the dispute raised in the present case is a frivolous one as it sought to be contended. We also find that the decision in Canara Bank (supra), which as pointed out hereinbefore turned on its own facts, is clearly distinguishable in its application to the present case. Since it is not in dispute that the petitioner has not, within one month of the filing of the present writ petition, applied to the COD for permission to litigate, the present petition cannot be entertained and requires to be dismissed as such. We, however, reiterate what has already been clarified in order dated 13.9.2006 that the time spent in this litigation will not be counted towards the period of completion of the assessment. We also make it clear that this order will not preclude the petitioner from approaching the COD for resolution of the dispute involved in the present case.

9. With these observations, the writ petition is dismissed with no order as to costs.