IN THE SURPEME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  4521  OF 2008 (Arising out of SLP (CIVIL) NO. 14051 of 2006)

Commissioner of Income Tax, Delhi-VI ….Appellant

Versus

M/s Oriental Insurance Co. Ltd. ….Respondent

WITH

(Civil Appeal No.4529 /2008 @ SLP ( C ) No.11969/2007)  (Civil Appeal No. 4524/2008 @ SLP ( C ) No.14039/2007) (Civil Appeal No. 4528/2008 @ SLP ( C ) No.14045/2007) (Civil Appeal No. 4530/2008 @ SLP ( C ) No.14052/2007) (Civil Appeal No. 4525/2008 @ SLP ( C ) No.14636/2007) (Civil Appeal No.4522/2008 @ SLP ( C ) No.15522/2006) (Civil Appeal No. 4526/2008 @ SLP ( C ) No.16286/2007) (Civil Appeal No. 4523/2008 @ SLP ( C ) No. 16982/2006 (Civil Appeal No. 4527/2008 @ SLP ( C ) No. 19728/2007) (Civil Appeal No.4537/2008 @ SLP (C ) No. 12829/2007)

J U D G M E N T

Dr. ARIJIT PASAYAT, J

1. Leave granted.

2. In all these appeals, identical questions are involved. The

assessee in each case is an insurance company and is covered

by  the  Insurance  Act,  1983  (in  short  the  ‘Insurance  Act’).

According to the appellant every insurance company has to be

assessed under Section 44 of the Income Tax Act, 1961 (in

short  the  ‘Act’)  as  per  Rule  5  of  the  First  Schedule.  An

assessment was made in each case and the same was upheld

by the Commissioner of Income Tax (Appeals). The Income Tax

Appellate Tribunal (in short the ‘Tribunal’) deleted the addition

made.  The  Tribunal  accepted  the  stand  of  the  respondent-

insurance company. Certain other connected cases were also

dealt  with. In all  these appeals  the question is whether the

Department would prefer appeals and/or file petitions without

obtaining clearance from the Committee of Disputes (in short

‘COD’) constituted in terms of order of this Court. According to

the High Court it was necessary to refer the matter to the said

Committee. The High Court held that the same was to be done

within a period  of  one  month in terms of  the  order  of  this

Court  in  Oil  and  Natural  Gas  Commission  v.  Collector  of

Central  Excise  (2004 (6)  SCC 437).  Accordingly  the appeals

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were dismissed.   

3. The High Court held that since this Court had set the

time frame there is no scope for any deviation therefrom.

4. Learned counsel for the appellant submitted that there is

really no statutory and/or rigidly framed time limit. This Court

only  highlighted  the  desirability  of  early  action  so  that

unnecessary litigation can be avoided.  

5. Learned  counsel  for  the  respondent  submitted  that  in

some  cases  the  concerned  Committee  has  also  declined  to

grant permission and those appeals have become infructuous.

In   Oil and Natural Gas Commission’s case (supra)  this Court

observed as follows:

“5. It  is  also  clarified  that  even  the  pending matters  before  any  court  or  tribunal  should also be the subject-matter of the deliberations of  the  High-Powered  Committee.  All  the matters pending as of today either instituted by  the  Union  of  India  or  any  of  the  public sector  undertakings  shall  within  one  month from today be referred by the appellant or the

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petitioner,  as  the  case  may be,  to  the  High- Powered  Committee.  The  High-Powered Committee  will  deal  with these matters most expeditiously  and  endeavour  to  resolve  the matters.

6. Accordingly, there should be no bar to the lodgement  of  an appeal  or  petition  either  by the  Union  of  India  or  the  public  sector undertakings before  any court or tribunal so as  to  save  limitation.  But,  before  such filing every endeavour should be made to have the clearance of the High-Powered Committee.

7. However, as to what the court or tribunal should do if such judicial remedies are sought before such a court or tribunal,  the order of 11-10-19911 clarifies: (SCC p. 542, para 4)

“4. It shall be the obligation of every court and every tribunal where such a  dispute  is  raised  hereafter  to demand  a  clearance  from  the Committee in case it  has not been so pleaded and in the absence of the clearance,  the  proceedings  would not be proceeded with.”

8. 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 the Cabinet Secretariat of the Government of India authorised  to  receive  notices  in  that  behalf. Shri K.T.S. Tulsi,  learned Additional  Solicitor

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General  stated  that  in  order  to  coordinate these  references  of  the  High-Powered Committee  the  Government  proposes  to nominate  the  Under-Secretary  (Coordination) in  the  Cabinet  Secretariat  as  the  nodal authority  to coordinate  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.”

(underlined for emphasis)

6. Referring  to  the  order  passed  by  this  Court  on

11.10.1991 i.e.  Oil and Natural Gas Commission and Anr. V.

Collector  of  Central  Excise (1995  Supp  (4)  SCC  541),  this

Court held that in the matter of setting up of the function of

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the High Powered Committee  for resolving disputes between

Union of India on one hand and Public Undertaking on the

other  required  some  clarification  as  some  misconception

arose.

7. In ONGC Case No. I i.e. (1995 Supp (4) SCC 541) in para

3 it was noted as follows:

“We direct that the Government of India shall set  up  a  Committee  consisting  of representatives from the Ministry of Industry, the  Bureau  of  Public  Enterprises   and  the Ministry of Law, to monitor disputes between Ministry and Ministry of Government of India, Ministry   and  public  sector  undertakings  of the  Government  of  India  and  public  sector undertakings  in  between   themselves,  to ensure that no litigation comes to Court  or to a  Tribunal  without  the  matter  having  been first  examined  by  the  Committee  and  its clearance   for  litigation.  Government  may include  a  representative   of  the  Ministry concerned in a specific case and one from the Ministry of Finance in the Committee.  Senior officers only should be nominated so that the Committee would function with status, control and discipline.

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8. In para 4 it was further observed as follows:

“It  shall be the obligation of every Court and every Tribunal where such a dispute is raised hereafter  to  demand  a  clearance  from  the Committee in case it has not been so pleaded and  in  the  absence  of  the  clearance,  the proceedings would not be proceeded with.”

9. Subsequently,  the  disputes  involving  the  State

Governments and the Public Sector Undertakings have been

considered by this Court and one such matter was dealt with

in  Oil and Natural Gas Corporation Ltd. V.  City & Industrial

Development Corporation, Maharashtra Ltd. And Ors. (2007

(7) SCC 39).  

10. It  needs  to  be  emphasized  that  there  was  actually  no

rigid time frame indicated by this Court. The emphasis on one

month’s  time was to  show urgency needed.  Merely  because

there is some delay in approaching the Committee that does

not make the action illegal.  The Committee is required to deal

with the matter expeditiously so that there is no unnecessary

backlog of appeals which ultimately may not be pursued. In

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that sense, it is imperative that the concerned authorities take

urgent  action  otherwise  the  intended  objective  would  be

frustrated.  There is no scope for lethargy. It is to be tested by

the  Court  as  to  whether  there  was  any  indifference  and

lethargy and in appropriate cases refuse to interfere. In these

cases factual position is not that. Therefore, we set aside the

order of the High Court in each case and direct consideration

of the question of desirability to proceed in the matter before it

on receipt of the report from the concerned Committee.  

11. Learned counsel for the appellant submitted that even if

the Committee has declined to grant permission it is still open

to raise the issues in appropriate proceedings. We express no

opinion in that regard.  But where the Committee has declined

to deal with the matter on the ground of belated approach, the

same cannot be sustained in view of our present order. The

Committee has to consider the matter on merits.

12. It is to be noted that where permission has been granted

by  the  Committee  there  is  no  impediment  on  the  Court  to

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examine the matter and take a decision on merits. But where

there is no belated approach as noted above, the matter has to

be  decided.  Court  has  to  decide  whether  because  of

unexplained  delay  and  lethargic  action  it  would  decline  to

entertain  the  matters.  That  would  depend  on  the  factual

scenario in each case, and no straight jacket formula can be

adopted.   

13. The  appeals  are  accordingly  allowed  to  the  aforesaid

extent. There will be no order as to costs.  

……………………………..J. (Dr. ARIJIT PASAYAT)

…………………………….J. (P. SATHASIVAM)

New Delhi, July 18, 2008    

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