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CASE NO.: Appeal (civil)  3143 of 2007

PETITIONER: Oil & Natural Gas Corporation Ltd

RESPONDENT: City & Indust. Dev. Corpn.,Maharashtra and Ors

DATE OF JUDGMENT: 20/07/2007

BENCH: Dr. ARIJIT PASAYAT & LOKESHWAR SINGH PANTA

JUDGMENT: J U D G M E N T  

CIVIL APPEAL NO. 3143 OF 2007 (Arising out of SLP (C) No. 21047 of 2004)

Dr. ARIJIT PASAYAT, J.

1.      Leave granted.

2.      Challenge in this appeal is to the order passed by a  Division Bench of the Bombay High Court dismissing the Civil  Writ Petition No.4036 of 2001 with Civil Application No.1583  of 2004. It was held that with reference to several judgments  of this Court the writ jurisdiction should not be exercised in  contractual matters. It was also held that there was no reason  whatsoever for which a Government of India undertaking shall  bypass the alternative remedy of a civil suit.  

3.      Background facts in a nutshell are as follows:

       A writ petition was filed by the appellant alleging inaction  on the part of the City & Industrial Development Corporation  of Maharashtra Limited (hereinafter referred to as ’CIDCO’) in  not executing the agreement of lease with the appellant- company. Prayer in the writ petition was for a direction by  issuance of an appropriate writ requiring the CIDCO to  execute the agreement in respect of the possession of plots  covered by the agreements.  Prayer essentially was (i) to hand  over the possession of plot of land admeasuring 24 hectares   demarcated in favour of the appellant situated at Bhandkhal  (Navghar), Taluka Uran alongwith approach road and water  supply till the boundary of the said plot of land; (ii) execute a  lease agreement for the period set out more particularly in the  letter of allotment dated 5th March, 1984 in respect of the said  plot of land; (iii) issue appropriate writ in respect of demand  for service charge contained in the letter dated 24th July, 1990  and (iv) other reliefs.   

4.      The High Court referred to several correspondence  exchanged between the parties but ultimately held that the  issues related to contractual matters and the writ petition was  not the appropriate remedy.  Findings were also recorded  regarding maintainability of the writ petition.

5.      In support of the appeal, learned counsel for the  appellant submitted that the High Court has lost sight of the

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fact that the dispute involved two public bodies. It was  highlighted by learned counsel for the appellant that this  Court in M/s Popcorn Entertainment & Anr. V. City Industrial  Development Corpn. & Anr. (JT 2007 (4) SC 70) held in para  15 about the maintainability of the writ petition. In paragraph  42 of the judgment it was noted that there was no dispute and  in fact there was concession regarding maintainability of the  writ petition. Reference has also been made to National  Highways Authority of India v. Ganga Enterprises and Anr.  (2003 (7) SCC 410) and Rajureshwar Associates v. State of  Maharashtra (2004 (6) SCC 362) to contend that in all  contractual matters a writ application can be entertained. The  three circumstances wherein relating to contractual matters  writ applications can be entertained were set out in Whirlpool  Corporation v. Registrar of Trade Marks, Mumbai and Ors.  (1998 (8) SCC 1).  

6.      Mr. Altaf Ahmad, learned senior counsel on the other  hand submitted that in a dispute of this nature, the course  indicated by this Court in Oil and Natural Gas Commission  and Anr. V. Collector of Central Excise (1992 Supp (2) SCC  432) can be applied.  

7.      In the instant case, CIDCO is a State entity and the  appellant is a central entity. The desirability of having a  committee to sort out differences between pubic sector  undertakings, State Governments, different Govt. departments  have been highlighted by this Court in several cases. In Chief  Conservator of Forests, Govt. of A.P. v. Collector and Ors.  (2003 (3) SCC 472) it was inter alia as follows:

"14. Under the scheme of the Constitution,  Article 131 confers original jurisdiction on the  Supreme Court in regard to a dispute between  two States of the Union of India or between  one or more States and the Union of India. It  was not contemplated by the framers of the  Constitution or CPC that two departments of a  State or the Union of India will fight a litigation  in a court of law. It is neither appropriate nor  permissible for two departments of a State or  the Union of India to fight litigation in a court  of law. Indeed, such a  course cannot but be  detrimental to the public interest as it also  entails avoidable wastage of public money and  time. Various departments of the Government  are its limbs and, therefore, they must act in  coordination and not in confrontation. Filing of  a writ petition by one department against the  other by invoking the extraordinary  jurisdiction of the High Court is not only  against the propriety and polity as it smacks of  indiscipline but is also contrary to the basic  concept of law which requires that for suing or  being sued, there must be either a natural or a  juristic person. The States/Union of India  must evolve a mechanism to set at rest all  interdepartmental controversies at the level of  the Government and such matters should not  be carried to a court of law for resolution of the  controversy. In the case of disputes between  public sector undertakings and the Union of  India, this Court in Oil and Natural Gas  Commission v. CCE (1992 Supp(2) SCC 432)  called upon the Cabinet Secretary to handle

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such matters. In Oil and Natural Gas  Commission v. CCE (1992 Supp (4) SCC 541)  this Court directed the Central Government to  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 the 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. The 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.

15. The facts of this appeal, noticed above,  make out a strong case that there is a felt need  of setting up of similar committees by the State  Government also to resolve the controversy  arising between various departments of the  State or the State and any of its undertakings.  It would be appropriate for the State  Governments to set up a committee consisting  of the Chief Secretary of the State, the  Secretaries of the departments concerned, the  Secretary of Law and where financial  commitments are involved, the Secretary of  Finance. The decision taken by such a  committee shall be binding on all the  departments concerned and shall be the stand  of the Government."

8.      In Punjab and Sind Bank v. Allahabad Bank and Ors.  (2006 (4) SCC 780) it was observed as follows:

"6. The matter was again examined in the case  of Chief Conservator of Forest v. Collector  (2003(3) SCC 472). In Para 14 and 15 it was  noted as follows:

"Under the scheme of the  Constitution, Article 131 confers  original jurisdiction on the Supreme  Court in regard to a dispute between  two States of the Union of India or  between one or more States and the  Union of India. It was not  contemplated by the framers of the  Constitution or the C.P.C. that two  departments of a State or the Union  of India will fight a litigation in a  court of law. It is neither  appropriate nor permissible for two  departments of a State or the Union  of India to fight litigation in a court  of law. Indeed, such a course cannot  but be detrimental to the public  interest as it also entails avoidable

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wastage of public money and time.  Various departments of the  Government are its limbs and,  therefore, they must act in co- ordination and not in confrontation.  Filing of a writ petition by one  department against the other by  invoking the extraordinary  jurisdiction of the High Court is not  only against the propriety and polity  as it smacks of indiscipline but is  also contrary to the basic concept of  law which requires that for suing or  being sued, there must be either a  natural or a juristic person. The  States/Union of India must evolve a  mechanism to set at rest all inter- departmental controversies at the  level of the Government and such  matters should not be carried to a  court of law for resolution of the  controversy. In the case of disputes  between public sector undertakings  and Union of India, this Court in Oil  and Natural Gas Commission v.  Collector of Central Excise (1992  Suppl. (2) SCC 432) called upon the  Cabinet Secretary to handle such  matters. In Oil and Natural Gas  Commission & Anr. v. Collector of  Central Excise (1995 Suppl. (4) SCC  541), this Court directed the Central  Government to set up a Committee  consisting of representatives from  the Ministry of Industry, the Bureau  of Public Enterprises and the  Ministry of Law, to monitor dispute  between Ministry and Ministry of  the 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. The 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.

       The facts of this appeal,  noticed above, make out a strong  case that there is felt need of setting  up of similar committees by the  State Government also to resolve the  controversy arising between various  departments of the State or the  State and any of its undertakings. It  would be appropriate for the State

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Governments to set up a Committee  consisting of the Chief Secretary of  the State, the Secretaries of the  concerned departments, the  Secretary of Law and where  financial commitments are involved,  the Secretary of Finance. The  decision taken by such a committee  shall be binding on all the  departments concerned and shall be  the stand of the Government. "

7.      The directions as noted above were  quoted in Mahanagar Telephone Nigam Ltd. v.  Chairman, Central Board, Direct Taxes and  another (2004(6) SCC 431) and were adopted  in paragraph 8. It was noted as follows:

       "Undoubtedly, the right to  enforce a right in a court of law  cannot be effaced. However, it must  be remembered that courts are  overburdened with a large number  of cases. The majority of such cases  pertain to Government Departments  and/or public sector undertakings.  As is stated in Chief Conservator of  Forests’ case [2003] 3 SCC 472 it  was not contemplated by the  framers of the Constitution or the  Civil Procedure Code that two  departments of a State or Union of  India and/or a department of the  Government and a public sector  undertaking fight a litigation in a  court of law. Such a course is  detrimental to public interest as it  entails avoidable wastage of public  money and time. These are all limbs  of the Government and must act in  co-ordination and not confrontation.  The mechanism set up by this court  is not, as suggested by Mr.  Andhyarujina, only to conciliate  between Government Departments.  It is also set up for purposes of  ensuring that frivolous disputes do  not come before courts without  clearance from the High Powered  Committee. 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

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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."

8.      The ONGC I to III cases (supra), Chief  Conservator’s case (supra) and Mahanagar  Telephone’s case (supra) deal with disputes  relating to Central Government, State  Government and Public Sector Undertakings.  They have no application to the facts of these  cases as the High Court has not indicated any  reason for its abrupt conclusion that the writ  petitioners are Public Sector Undertakings. In  the absence of a factual determination in that  regard, the decisions can have no application."     

9.      The position has also been examined in U.P. SEB and  Anr. V. Sant Kabir Sahakari Katai Mills Ltd. (2005 (7) SCC  576) and Mahanagar Telephone Nigam’s case (supra).  

10.     The matter is pending since 1990. Considering the  nature of the controversy which is a recurring feature we  direct that a committee be formed to sort out the differences  between the Central Government and the State Government  entities. The composition of such committee shall be as  follows:

(1)     The Cabinet Secretary of the Union; (2)     Chief Secretary of the State; (3)     Secretaries of the concerned departments of Union  and the State; and  (4)     Chief Executive Officers of the concerned  undertakings.

11.     As the matter is pending since long, we direct that the  Committee shall be constituted forthwith to take a decision  within 4 months from the date of receipt of copy of this  judgment.  

12.     The appeal is disposed of with no order as to costs.