MAHANAGAR TELEPHONE NIGAM LTD.versusCHAIRMAN, CENTRAL BOARD DIRECT TAXES AND ANR.

             MAHANAGAR TELEPHONE NIGAM LTD.                                   A
                            v.
       CHAIRMAN, CENTRAL BOARD DIRECT TAXES AND ANR.

                                 MAY 7, 2004
                                                                              B
                    [S.N. VARIAVA AND H.K. SEMA, JJ.]

         Administrative Law :

          Inter-departmental disputes-Dispute between MTNL and CBDT-
    MTNL aggrieved by show cause notice issued to it by CBDT-Dispute C
     referred to High Power Committee-Committee directing to await
    appealable order-Committee not permitting to file writ petition in High
    Court-Writ petition filed before High Court-Held, against a show cause
     notice litigation should not be encouraged-Decision of High Power
    Committee merely emphasized the well settled position-It is an eminently D
    fair and correct decision-The purpose of the decision was to prevent
    frivolous litigation-No right of the appellants is being affected-It has
     been clarified that Jhe ap}Jellar;ts could ''niove a court of law against an
    appeqlable order_;By not ''irfaintaining discipline and abiding by the
    decision the appellants have wasted public money and time of the courts- E
    As clearance has not been given to the appellants these proceedings cannot
•
     be proceeded with-High Court was wrong in dealing with the merits of
     the matter.

          Government Departments-Inter-departmental disputes-Setting up F
    of High Power Committee-Purpose of-Committee not permitting to file
    writ petition-Effect of-The mechanism of setting up of High Power
    Committee to resolve disputes between two departments of the Government
    or between· a department and a Public Sector Undertaking of the
    Government, is not only to conciliqte between the Government departments,
    but is also set up for purposes bf ensuring that frivolous disputes do not G
    come before courts without clearance from High Power Committee-If it
    can, the High Power Committee will resolve the dispute-If the dispute is
    not resolved the Committee would undoubtedly give clearance-However,
    there could also be frivolous /itigation proposed by a department of the
    Government or a Public Sector Undertaking-This could be prevented by H
                                       593
    594                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A the High Power Committee-In such cases there is no question ofresolving
  the dispute-The Committee only has to refase 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-Even ifthe Department/Public Sector Undertakingfinds the decision
B unpalatable, discipline requires that they abide by it.
          Oil and Natural Gas Commission v. Collector of Central Excise,
    (19951 Supp. 4 SCC 541; Chief Conservator of Forests v. Collector,
    (200313 SCC 472; Canara Bank v. National Thermal Power Corporation,
C   (20011 1 SCC 43 and CCE v. Jeesop and Co. Ltd., (19991 9 SCC 181,
    relied on.

         Oil and Natural Gas Commission v. Collector of Central Excise
    (1994) 70 ELT 45 SC, referred to.

D        CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3058 of
    2004.

         From the Judgment and Order dated 24.8.2000 of the Delhi High
    Court in C.W.P. No. 228 of 2000.
E
          T.R. Andhyarujina and S. Rajappa for the Appellant.                      •

         Mukul Rohatgi, Additional Solicitor General, Sanjiv Sen and B.V.
    Balaram Das for the Respondents.

F         The following Order of the Court was delivered:

          Leave granted.

          This Appeal is against the Judgment dated 24th August, 2000.
G
          Mr. Rohatgi has raised a praliminary objection to the Special Leave
    Petition being proceeded with by this Court. He submits that this Court has,
    in the case of Oil and Natural Gas Commission v. Collector of Central
    Excise reported in, [ 1995] Supp. 4 SCC 541, held that in every case where
H   a dispute is between Government Departments and/or between a Government
MAHAN AGAR TELEPHONE NIGAM LTD. .-. CHAIRMAN, CENTRAL BOARD DIRECT TAXES   595
Department and a Public Sector Undertaking, the matter should be referred A
to the High Powered Committee established by the Government pursuant
to an order of this Court dated I Ith September 1991. He pointed out that
it has been held by this Court that it is the duty of every Court or Tribunal
to demand clearance from the Committee and that in the absence of
clearance the proceedings must not be proceeded with.
                                                                                 B
      Mr. Rohatgi also relied upon the case of C.C.E. v. Jeesop and Co.
Ltd. reported in, [1999] 9 SCC 181, wherein this Court has again disposed
of an Appeal filed by the Collector of Central Excise against two public
sector companies by holding that the course indicated in Oil and Natural
Gas Commission's case (supra) has to be followed. He also relied on a C
decision of this Court in the case Jf Canara Bank v. National Thermal
Power Corporation reported in, [2001] 1SCC43, wherein it has been held
that the purpose of the directions in Oil and Natural Gas Commission's
case (supra) is to see that frivolous litigation between Government
Departments and Public Sector Undertakings should not be dragged on D
in the Courts. He also relied upon the case of Chief Conservator of
Forests v. Collector reported in, [2003] 3 SCC 472, wherein it is held as
follows :
                          0
               "14. Under the scheme of the Constitution, Article 131,
         confers original jurisdiction on the Supreme Court in regard to a E
         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
         oflaw. It is neither appropriate nor permissible for two departments F
         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 G
         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 oflaw 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 H
    596               SUPREME COURT REPORTS [2004) SUPP. 2 S.C.R.

A           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 oflndia, this Court
            in Oil and Natural Gas Commission v. CCE, [1992) Suppl. 2 SCC
B           432 called upon the Cabinet Secretary to handle such matters. In
            Oil and Natural Gas Commission & Anr v. CCE, [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
c           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
D
            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.
E
                  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
F           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
G           be binding on all the departments concerned and shall be the stand
            of the Government"

         Mr. Rohatgi pointed that in this case the dispute had been referred
    to the High Court Committee and the Committee has decided as
H   follows:
MAHAN AGAR TELEPHONE NIGAM LTD. v. CHAIRMAN, CENTRAL BOARD DIRECT TAXES   597

         "The Committee having regard to the fact that Mahanagar A
         Telephone Nigam Ltd. was contemplating writ petition against
         show-cause-notice advised Mahanagar Telephone Nigam Ltd. to
         await appealable order. The Committee accordingly, did not
         permit to file writ petition in the High Court at this stage."

                                                                                B
He submitted that the Appellants were bound to comply with the decision
of the High Powered Committee and await an appealable Order. Mr.
Rohatgi pointed out that by an interim order dated 8th May, 2002 this Court
has allowed the proceedings, pursuant to the show-cause-notice, to proceed
but this Court has directed that no final Orders be passed. He submitted C
that this Court should now permit the final Order to be passed and the
Appellants can then have their remedy against the final Order.

      As against this, Mr. Andhyarujina submitted that every citizen of this
country, including a Public Sector Body, has a right to agitate its grievances
in a Cou1t of law. He submitted that if the fundamental rights of a D
Corporation, even though it be a Public Sector Undertaking, are affected,
then the Body cannot be prevented from agitating its rights in a Court of
law. He submitted that the Order of this Court in Oil and Natural Gas
Commissions' case (supra) only ensures that disputes between the
Government Departments and/or Public Sector Bodies first go for E
conciliation by the High Powered Committee. He submitted that the
intention was not and could not be that the Body/Department be precluded
from approaching a Court of law for enforcing its rights. Mr. Andhyarujina
submitted that it has been so clarified by this Court in the case of Oil and
Natural Gas Commission v. Collector ofCentral Excise, reported in (1994) F
70 EL T 45 SC. He strongly relies upon Para 4 of this Judgment which reads
as follows :

               "4. There are some doubts and problems that have arisen in
         the working out of these arrangements which require to be
         clarified and some crease ironed out. Some doubts persist as to G
                                   '
         the precise import and imp Iications of the words and recourse to
         litigation should be avoided. It is clear that order of this Court is
         not to effect that - nor can that be done - so far as Union of
         India and its statutory corporations arc concerned, the statutory
         remedies are effaced. Indeed, the purpose of tile constitution of H
    598                SUPREME COURT Rl::.PORTS [2004) SUPP. 2 S.C.R.

A            the High Power Committee was not to take away those remedies.
             The relevant portion of the order reads :

                  "We direct that the Government of India shall set up a
                  Committee consisting representatives from the Ministry of
                  Industry, the Bureau of Public Enterprises and the Mmistry
B
                  of Law, to monitor disputes between Ministry and Ministry
                  of Government of India; Ministry and Public Sector
                  Undertaking 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
c                 having been first examined by the Committee and its
                  clearance for litigation. Government may include a
                  representatives of the Ministry concerned in a specific case
                  and one from the Ministry of Finance in the Committee.
                  Senior Officres only should be nominated so that the
D                 Committee would function with status, control and discipline."

             It is abundantly clear that the machinery contemplated is only to
             ensure that no litigation comes to Court without the parties having
             had an opportunity of conciliation before an in-house Committee."
E
    Mr. Andhyarujina submitted that this Court has thus clarified that the
    statutory remedies are not to be effaced and that the only purpose is to
    ensure that the parties first attempt conciliation before the High Powered
    Committee. He submitted that if the High Powered Committee cannot
F   resolve the dispute then it must grant leave to approach a Court of law.
    He submitted that otherwise valuable rights of the Public Sector Undertaking/
    Department, to approach a Court of law, would be effaced and the party
    would be left remedyless.

          We have heard the parties.
G
          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
H   in Chief Conservator of Forests' case (supra) it was not contemplated by
MAHANAGAR TELEPHONE NIGAM LTD. v. CHAIRMAN, CENTRAL BOARD DIRECT TAXES   599

the framers of the Constitution or C.P.C. that two departments of a State A
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 B
is not as suggested by Mr. Andhyarujina only to conciliate between the
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 is 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 C
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 in 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 D
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 rigi1t is affected. The Committee is constituted
of highly placed officers of the Government, who do not have an interest E
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 F
rights are affected. This should not be allowed to be done.

      In this case this is absolutely what has happened. The Appellants
wanted to approach the Court only against a show-cause-notice. It is settled
law that against a show-cause-notice litigation should not be encouraged.
The decision of the High Powered Committee, set out hereinabove, merely G
emphasizes the well settled position. It is an eminently fair and correct
decision. The purpose of the decision was to prevent frivolous litigation.
No right of the Appellants is being affected. It has been clarified that the
Appellants could move a Court of law against an appealable order. By not
maintaining discipline and abiding by the decision the Appellants have H
    600               SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A wasted public money and time of the Courts. The clarificatory order, relied
  upon by Mr. Andhyarujina, clarifies in Para 5 as to what is to happen if
  clearance is not given by the Committee. It is set out that in the absence
  of the clearance the proceedings must not be proceeded with. This position
  is further clarified in Chief Conservator of Forests' case (supra) where
B again this Court has held that the decision taken by such a Committee is
  binding on all Departments concerned and it is the stand of the Government.

        In view of this settled law, which is binding on us, we hold that as
  clearance has not been given to the appellants these proceedings cannot
C be proceeded with. The High Court was wrong in dealing with the merits
  of the matter. We, therefore, do not examine whether the High Court was
  right on merits. The Appeal accordingly stands disposed of with no order
  as to costs.

          We clarify that the Respondents are now free to pass the Order.
D However, any observation/finding given by the High Court, on merits, will
    not be used or taken into consideration. The Appellants will be at liberty
    to pursue their legal remedy against that Order in case they are affected
    by that Order.

E R.P.                                                   Appeal disposed of.