CASE NO.: Appeal (civil) 9688-9699 of 2003 PETITIONER: Punjab & Sind Bank RESPONDENT: Allahabad Bank & Anr DATE OF JUDGMENT: 28/03/2006 BENCH: ARIJIT PASAYAT & TARUN CHATTERJEE JUDGMENT:
J U D G M E N T
ARIJIT PASAYAT, J.
Challenge in these appeals is to the judgment delivered
by a Division Bench of the Calcutta High Court, in an appeal
filed by the appellant, the defendant in the suit filed by
respondent no.1-Bank. Learned Single Judge in the said suit
held that there was no need to adopt procedure indicated by
this Court in Oil and Natural Gas Commission and Anr. v.
Collector of Central Excise (1992 Supp. (2) SCC 432)
(described hereinafter case as ONGC I Case ). The Division
Bench affirmed the view of learned Single Judge. The
correctness of the view expressed by the learned Single Judge
and the Division Bench forms the subject-matter of challenge
in this appeal.
The suit was filed by the respondent no.1-Bank against
the appellant-Bank along with 11 other defendants with the
following prayers:-
(a) Declaration that the Banker’s cheque copy
whereof is annexed Marked A hereto is void
and not binding on the plaintiff.
(b) Decree of Rs.5,62,66,671/- against the
defendants jointly and/or severally and/or
such of them for such amount as this Hon’ble
Court may deem fit and proper.
(c) Decree of Rs.5,62,66,671/- against the
defendant no.1 together with interest.
(d) Interest including interim interest as claimed
in paragraph 29;
(e) Receiver;
(f) Costs;
(g) Further any other reliefs.
An application was filed by the appellant-Bank for
dismissal of the suit on the ground that the modalities
indicated in ONGC-I case (supra) were not followed. Learned
Single Judge held that the decision has to be read in the
context which was passed. This Court never intended to
extinguish the right to sue. Intention was to avoid litigation
when the parties are government or its undertakings.
The order was challenged before the Division Bench
which, inter-alia, upheld view of learned Single Judge with
some additional reasons. We shall deal with the reasoning in
detail later.
The view in ONGC-I case (supra) was further elaborated
in Oil and Natural Gas Commission v. C.C.E. 1995 (Supp.) 4
SCC 541) (For sake of convenience described as ONGC-II). It
was noted in Oil and Natural Gas Commission v. C.C.E.
(2004(6) SCC 437) (for convenience described as ONGC-III)
that some doubts and problems arose in the working out of
the arrangements in terms of the order of this Court dated
11.10.1991 ONGC-II case (supra). It was noted in ONGC-III
case (supra) as follows:
“There are some doubts and problems that
have arisen in the working out of these
arrangements which require to be clarified and
some creases ironed out. Some doubts persist
as to the precise import and implications of the
words “and recourse to litigation should be
avoided”. It is clear that the order of this
Court is not to the effect that nor can that be
done so far as the Union of India and its
statutory corporations are concerned, their
statutory remedies are effaced. Indeed, the
purpose of the constitution of the High-
powered Committee was not to take away
those remedies. The relevant portion of the
order reads: (SCC pp. 541-42 para 3)
“3. 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
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.”
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.”
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 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
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. ”
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 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.”
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.
These aspects were recently highlighted in U.P.S.E.B.
and Anr. v. Sant Kabir Sahakari Katai Mills Ltd. (2005 (7) SCC
576).
The Division Bench of the High Court did not adopt the
modalities indicated by this Court in the various decisions
referred to above with the following reasoning:
“Mr. Mitra supported the judgment of the
Hon’ble Mr. Justice Dilip Kumar Seth delivered
in the court below and, with respect; we do not
find anything to differ from His Lordship’s
views in this matter. We would, however, have
to add only one point thereto which we
consider to be the deciding factor.
The respondent/plaintiff here has alleged
that the Punjab & Sind Bank (no doubt
vicariously, and because of persons working of
the Bank) acted fraudulently, or at least
negligently, and sent for clearing a cheque
which was worthless, and thus brought into
circulation Rs.3.10 crore which should not
have been brought into circulation at all.
These allegations have not yet been
pronounced upon by any Civil Court.
If the above decision of the Government
Committee for settlement of disputes is
binding on the High Court, then and in that
event, the High Court is not entitled to try the
suit, and must exonerate the Punjab & Sind
Bank (and therefore indirectly all its then
concerned employees) of both fraud and
negligence.
Mr. Chatterjee submitted that one is not
remedy less, and in case the decision is not
reasonable, it could be challenged in
appropriate writ proceedings.
But the point which falls for decision is,
can a Government Committee, which is only a
part of the administrative machinery of the
Union of India, stop by its administrative
decision, the judicial process of adjudication,
which is the job of that wing of the Union of
India, which is known as the judiciary.
We are of the opinion that the dicta in the
ONGC’s case, if given their interned meaning,
would, have the above effect, of impeding the
judicial process by having recourse to decision
of an administrative body, as the first and
permanent deciding body.
We are of the opinion, and we say this
with the greatest of respect, which is at our
command, that this is wholly unconstitutional.
It is not necessary to enlarge on a matter so
fundamental because the separation of the
legislature, the judiciary and the executive is
more basis than anything else in our
Constitution as it stands today. We are
accordingly of the opinion, and this is again
said with as much respect before, that the
decision in the ONGC’s case is itself of an
administrative nature and has to force to
emasculate the judiciary.”
(Underlined for emphasis)
To say the least the view expressed by the Division Bench
of the High Court is confusing and patently shows that the
ratio of the various decisions has not been understood in the
proper perspective. To say that the decision in the ONGC-I
case (supra) was of an administrative nature though a judicial
order shows non-application of mind. Any order passed in a
judicial proceeding, (much less an order passed by this Court)
can by no stretch of imagination be described as one of
“administrative nature”.
In the circumstances we set aside the judgment of the
Division Bench, remit the matter to the High Court for fresh
consideration keeping in view the modalities and principles set
out by this Court in the various decisions referred to above.
Appeal is allowed to the aforesaid extent with no order as
to costs.