Punjab And Sind Bank vs Deputy Commissioner Of ...
2006 Latest Caselaw 1894 Del

JUDGMENT

1. This appeal by the Punjab and Sind Bank is directed against the judgment dated February 24, 2006, passed by the Income-tax Appellate Tribunal ("the Tribunal") in ITA Nos. 1910/Delhi/99 and 1960/Delhi/99 for the assessment year 1995-96. This appeal was filed on September 14, 2006.

2. In the memorandum of appeal, it is stated as under:

That the appellant bank being a public sector undertaking is required to obtain approval from the Committee on Disputes (COD) for pursuing the present appeal. However, the appellant is filing the present appeal for saving limitation and shall be seeking COD clearance within one month from the filing of the present appeal, in terms of the ratio of the judgment of the hon'ble Supreme Court in the case of ONGC v. Collector of Central Excise .

3. In similar matters, previous Benches of this Court have been passing standard orders "disposing" of such appeals in the following terms:

The learned Counsel for the appellant states that the Committee on Disputes has been approached for clearance for preferring and prosecuting the appeal. They are awaiting the sanction. Hence, we dispose of this appeal with liberty to the appellant to revive appeal on obtaining clearance from the Committee on Disputes.

4. Learned Counsel for the parties appearing before us submitted that a similar order can be passed in the present appeal as well. While we are inclined to accept the plea that this appeal need not be kept pending, and can be revived later at a time after the clearance of the COD is obtained, we would not like to leave that option open ended. We feel that a few more conditionalities require to be attached to such an order. We wish to briefly explain reasons for adopting this approach.

5. The judicially evolved practice of referring disputes that arise either between two branches of Government or between the Government and a public sector undertaking (PSU), to an Alternative Disputes Resolution (ADR) mechanism of the Government itself, has its genesis in an order dated October 11, 1991, passed by the hon'ble Supreme Court in Civil Appeal Nos. 2058-59 of 1988 (Oil and Natural Gas Commission v. CCE [1995] Suppl (4) SCC 541). In that order, it was recorded that the Cabinet Secretary has issued instructions to all the Departments of the Government of India as well as to the PSUs that all disputes, "regardless of the type, should be resolved amicably by mutual consultation or through the good offices of empowered agencies of the Government or through arbitration and recourse to litigation should be eliminated." In the same order, a direction was issued to the Government of India to constitute a "High Powered Committee" (HPC) for the purpose and it was mandated that no litigation should be brought before the court or a Tribunal "without the matter having been first examined by the Committee and its clearance obtained for litigation".

5.1 Thereafter, by an order dated January 7, 1994, in Oil and Natural Gas Commission v. CCE (hereafter ONGC II), the hon'ble Supreme Court held (page 439):

Wherever appeals, petitions, etc., are filed without the clearance of the High-Powered Committee so as to save limitation, the appellant or the petitioner, as the case may be, shall within a month from such filing, refer the matter to the High-Powered Committee, with prior notice to the designated authority in Cabinet Secretariat of the Government of India authorized to receive notices in that behalf. Shri K.T.S. Tulsi, learned Additional Solicitor General, stated that in order to co-ordinate these references of the High-Powered Committee the Government proposes to nominate the Under Secretary (Co-ordination) in the Cabinet Secretariat as the nodal authority to co-ordinate these references. The reference shall be deemed to have been made and become effective only after a notice of the reference is lodged with the said nodal authority. The reference shall be deemed to be valid if made in the case of the Union of India by its Secretary, Ministry of Finance, Department of Revenue, and in the case of Public Sector Undertakings by its Chairman, Managing Director or Chief Executive, as the case may be. It is only after such reference to the High-Powered Committee is made in the manner indicated that the operation of the order or proceedings under challenge shall be suspended till the High-Powered Committee resolves the dispute or gives clearance to the litigation. If the High-Powered Committee is unable to resolve the matter for reasons to be recorded by it, it shall grant clearance for the litigation.

(emphasis Here printed in italic supplied)

5.2 The above order in ONGC II's case [2004] 6 SCC 437 may be summarized thus:

(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. 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;

(v) It is only after the High-Powered Committee is so approached by the party seeking to litigate 'that the operation of the order or proceedings under challenge shall be suspended till the High-Powered Committee resolves the dispute or gives clearance to the litigation'.

5.3. The consequence of the clearance not being given by the High-Powered Committee [now renamed as the Committee on Disputes (COD)] was explained in Mahanagar Telephone Nigam Ltd. v. Chairman CBDT . It was clarified that if the clearance is not granted by the COD, the appeal cannot be entertained and should be dismissed as not maintainable in the absence of such clearance. The Supreme Court observed (page 653):

...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.

(emphasis here printed in italics supplied)

6. The position that emerges from a reading of both ONGC II's case and Mahanagar Telephone Nigam Ltd.'s case is that prior clearance by the COD to litigate is mandatory. If clearance is refused that is the end of the matter and the party seeking to litigate has to abide by it. If the COD is unable to resolve the dispute and also does not refuse permission for the reason that the litigation cannot be seen as frivolous, then it shall grant clearance. In effect, the COD cannot keep the party in suspense when it is unable to resolve the dispute. It has to decide one way or the other.

7. Before we proceed further in the matter, we would first like to ascertain if the appellant has, in fact, made an application to the COD within one month from the filing of the appeal in this court, i.e., on or before October 13, 2006. If the appellant has not made such an application, the appeal would have to be dismissed on that ground itself in view of the decision of the hon'ble Supreme Court in ONGC II's case .

8. Accordingly, the matter is directed to be listed on November 1, 2006, for the appellant to report to this Court whether the reference was made to the COD by it within the time stipulated, i.e., on or before October 13, 2006.