{"id":82517,"date":"2006-03-28T00:00:00","date_gmt":"2006-03-27T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/punjab-sind-bank-vs-allahabad-bank-anr-on-28-march-2006"},"modified":"2019-03-15T11:56:54","modified_gmt":"2019-03-15T06:26:54","slug":"punjab-sind-bank-vs-allahabad-bank-anr-on-28-march-2006","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/punjab-sind-bank-vs-allahabad-bank-anr-on-28-march-2006","title":{"rendered":"Punjab &amp; Sind Bank vs Allahabad Bank &amp; Anr on 28 March, 2006"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Punjab &amp; Sind Bank vs Allahabad Bank &amp; Anr on 28 March, 2006<\/div>\n<div class=\"doc_author\">Author: A Pasayat<\/div>\n<div class=\"doc_bench\">Bench: Arijit Pasayat, Tarun Chatterjee<\/div>\n<pre>           CASE NO.:\nAppeal (civil)  9688-9699 of 2003\n\nPETITIONER:\nPunjab &amp; Sind Bank\n\nRESPONDENT:\nAllahabad Bank &amp; Anr\n\nDATE OF JUDGMENT: 28\/03\/2006\n\nBENCH:\nARIJIT PASAYAT &amp; TARUN CHATTERJEE\n\nJUDGMENT:\n<\/pre>\n<p>J U D G M E N T<\/p>\n<p>ARIJIT PASAYAT, J.\n<\/p>\n<p>Challenge in these appeals is to the judgment delivered<br \/>\nby a Division Bench of the Calcutta High Court, in an appeal<br \/>\nfiled by the appellant, the defendant in the suit filed by<br \/>\nrespondent no.1-Bank. Learned Single Judge in the said suit<br \/>\nheld that there was no need to adopt procedure  indicated by<br \/>\nthis Court in <a href=\"\/doc\/619283\/\">Oil and Natural Gas Commission and Anr. v.<br \/>\nCollector of Central Excise<\/a> (1992 Supp. (2) SCC 432)<br \/>\n(described hereinafter case as ONGC I Case ).  The Division<br \/>\nBench affirmed the view of learned Single Judge.  The<br \/>\ncorrectness of the view expressed by the learned Single Judge<br \/>\nand the Division Bench forms the subject-matter of challenge<br \/>\nin this appeal.\n<\/p>\n<p>The suit was filed by the respondent no.1-Bank against<br \/>\nthe appellant-Bank along with 11 other defendants with the<br \/>\nfollowing prayers:-\n<\/p>\n<p>(a)\tDeclaration that the Banker&#8217;s cheque copy<br \/>\nwhereof is annexed Marked A hereto is void<br \/>\nand not binding on the plaintiff.\n<\/p>\n<p>(b)\tDecree of Rs.5,62,66,671\/- against the<br \/>\ndefendants jointly and\/or severally and\/or<br \/>\nsuch of them for such amount as this Hon&#8217;ble<br \/>\nCourt may deem fit and proper.\n<\/p>\n<p>(c)\tDecree of Rs.5,62,66,671\/- against the<br \/>\ndefendant no.1 together with interest.\n<\/p>\n<p>(d)\tInterest including interim interest as claimed<br \/>\nin paragraph 29;\n<\/p>\n<p>(e)\tReceiver;\n<\/p>\n<p>(f)\tCosts;\n<\/p>\n<p>(g)\tFurther any other reliefs.\n<\/p>\n<p>\tAn application was filed by the appellant-Bank for<br \/>\ndismissal of the suit on the ground that the modalities<br \/>\nindicated in ONGC-I case (supra) were not followed.  Learned<br \/>\nSingle Judge held that the decision has to be read in the<br \/>\ncontext which was passed.  This Court never intended to<br \/>\nextinguish the right to sue. Intention was to avoid litigation<br \/>\nwhen the parties are government or its undertakings.\n<\/p>\n<p>\tThe order was challenged before the Division Bench<br \/>\nwhich, inter-alia, upheld view of learned Single Judge with<br \/>\nsome additional reasons.  We shall deal with the reasoning in<br \/>\ndetail later.\n<\/p>\n<p>\tThe view in ONGC-I case (supra) was further elaborated<br \/>\nin <a href=\"\/doc\/1232713\/\">Oil and Natural Gas Commission v. C.C.E.<\/a> 1995 (Supp.) 4<br \/>\nSCC 541) (For sake of convenience described as ONGC-II).  It<br \/>\nwas noted in <a href=\"\/doc\/1232713\/\">Oil and Natural Gas Commission v. C.C.E.<\/a><br \/>\n(2004(6) SCC 437) (for convenience described as ONGC-III)<br \/>\nthat some doubts and problems arose in the working out of<br \/>\nthe arrangements in terms of the order of this Court dated<br \/>\n11.10.1991 ONGC-II case (supra). It was noted in ONGC-III<br \/>\ncase (supra) as follows:\n<\/p>\n<p>&#8220;There are some doubts and problems that<br \/>\nhave arisen in the working out of these<br \/>\narrangements which require to be clarified and<br \/>\nsome creases ironed out.  Some doubts persist<br \/>\nas to the precise import and implications of the<br \/>\nwords &#8220;and recourse to litigation should be<br \/>\navoided&#8221;.  It is clear that the order of this<br \/>\nCourt is not to the effect that  nor can that be<br \/>\ndone  so far as the Union of India and its<br \/>\nstatutory corporations are concerned, their<br \/>\nstatutory remedies are effaced. Indeed, the<br \/>\npurpose of the constitution of the High-<br \/>\npowered Committee was not to take away<br \/>\nthose remedies.  The relevant portion of the<br \/>\norder reads: (SCC pp. 541-42 para 3)<\/p>\n<p>&#8220;3.\tWe direct that the Government<br \/>\nof India shall set up a committee<br \/>\nconsisting of representatives from<br \/>\nthe Ministry of Industry, the Bureau<br \/>\nof Public Enterprises and the<br \/>\nMinistry of Law, to monitor disputes<br \/>\nbetween Ministry and Ministry of<br \/>\nthe Government of India, Ministry<br \/>\nand public sector undertakings of<br \/>\nthe Government of India and public<br \/>\nsector undertakings in between<br \/>\nthemselves to ensure that no<br \/>\nlitigation comes to court or to a<br \/>\ntribunal without the matter having<br \/>\nbeen first examined by the<br \/>\nCommittee and its clearance for<br \/>\nlitigation.  The Government may<br \/>\ninclude a representative of the<br \/>\nMinistry concerned in a specific case<br \/>\nand one from the Ministry of<br \/>\nFinance in the Committee.  Senior<br \/>\nofficers only should be nominated so<br \/>\nthat the Committee would function<br \/>\nwith status, control and discipline.&#8221;\n<\/p>\n<p>It is abundantly clear that the machinery<br \/>\ncontemplated is only to ensure that no<br \/>\nlitigation comes to court without the parties<br \/>\nhaving had an opportunity of conciliation<br \/>\nbefore an in-house committee.&#8221;\n<\/p>\n<p>\tThe matter was again examined in the case of <a href=\"\/doc\/132665\/\">Chief<br \/>\nConservator of Forest v. Collector<\/a> (2003(3) SCC 472). In Para<br \/>\n14 and 15 it was noted as follows:\n<\/p>\n<p>&#8220;Under the scheme of the Constitution, Article<br \/>\n131 confers original jurisdiction on the<br \/>\nSupreme Court in regard to a dispute between<br \/>\ntwo States of the Union of India or between<br \/>\none or more States and the Union of India. It<br \/>\nwas not contemplated by the framers of the<br \/>\nConstitution or the C.P.C. that two<br \/>\ndepartments of a State or the Union of India<br \/>\nwill fight a litigation in a court of law. It is<br \/>\nneither appropriate nor permissible for two<br \/>\ndepartments of a State or the Union of India to<br \/>\nfight litigation in a court of law. Indeed, such a<br \/>\ncourse cannot but be detrimental to the public<br \/>\ninterest as it also entails avoidable wastage of<br \/>\npublic money and time. Various departments<br \/>\nof the Government are its limbs and, therefore,<br \/>\nthey must act in co-ordination and not in<br \/>\nconfrontation. Filing of a writ petition by one<br \/>\ndepartment against the other by invoking the<br \/>\nextraordinary jurisdiction of the High Court is<br \/>\nnot only against the propriety and polity as it<br \/>\nsmacks of indiscipline but is also contrary to<br \/>\nthe basic concept of law which requires that<br \/>\nfor suing or being sued, there must be either a<br \/>\nnatural or a juristic person. The States\/Union<br \/>\nof India must evolve a mechanism to set at rest<br \/>\nall inter-departmental controversies at the<br \/>\nlevel of the Government and such matters<br \/>\nshould not be carried to a court of law for<br \/>\nresolution of the controversy. In the case of<br \/>\ndisputes between public sector undertakings<br \/>\nand Union of India, this Court in <a href=\"\/doc\/619283\/\">Oil and<br \/>\nNatural Gas Commission v. Collector of<br \/>\nCentral Excise<\/a> (1992 Suppl. (2) SCC 432)<br \/>\ncalled upon the Cabinet Secretary to handle<br \/>\nsuch matters. <a href=\"\/doc\/619283\/\">In Oil and Natural Gas<br \/>\nCommission &amp; Anr. v. Collector of Central<br \/>\nExcise<\/a> (1995 Suppl. (4) SCC 541), this Court<br \/>\ndirected the Central Government to set up a<br \/>\nCommittee consisting of representatives from<br \/>\nthe Ministry of Industry, the Bureau of Public<br \/>\nEnterprises and the Ministry of Law, to<br \/>\nmonitor dispute between Ministry and Ministry<br \/>\nof the Government of India, Ministry and<br \/>\npublic sector undertakings of the Government<br \/>\nof India and public sector undertakings in<br \/>\nbetween themselves, to ensure that no<br \/>\nlitigation comes to court or to a Tribunal<br \/>\nwithout the matter having been first examined<br \/>\nby the Committee and its clearance for<br \/>\nlitigation. The Government may include a<br \/>\nrepresentative of the Ministry concerned in a<br \/>\nspecific case and one from the Ministry of<br \/>\nFinance in the Committee. Senior officers only<br \/>\nshould be nominated so that the Committee<br \/>\nwould function with status, control and<br \/>\ndiscipline.\n<\/p>\n<p>\tThe facts of this appeal, noticed above,<br \/>\nmake out a strong case that there is felt need<br \/>\nof setting up of similar committees by the State<br \/>\nGovernment also to resolve the controversy<br \/>\narising between various departments of the<br \/>\nState or the State and any of its undertakings.<br \/>\nIt would be appropriate for the State<br \/>\nGovernments to set up a Committee consisting<br \/>\nof the Chief Secretary of the State, the<br \/>\nSecretaries of the concerned departments, the<br \/>\nSecretary of Law and where financial<br \/>\ncommitments are involved, the Secretary of<br \/>\nFinance. The decision taken by such a<br \/>\ncommittee shall be binding on all the<br \/>\ndepartments concerned and shall be the stand<br \/>\nof the Government. &#8221;\n<\/p>\n<p>\tThe directions as noted above were quoted in <a href=\"\/doc\/1808521\/\">Mahanagar<br \/>\nTelephone Nigam Ltd. v. Chairman, Central Board, Direct<br \/>\nTaxes and<\/a> another (2004(6) SCC 431) and were adopted in<br \/>\nparagraph 8. It was noted as follows:\n<\/p>\n<p>\t&#8220;Undoubtedly, the right to enforce a right<br \/>\nin a court of law cannot be effaced. However, it<br \/>\nmust be remembered that courts are<br \/>\noverburdened with a large number of cases.<br \/>\nThe majority of such cases pertain to<br \/>\nGovernment Departments and\/or public sector<br \/>\nundertakings. As is stated in Chief<br \/>\nConservator of Forests&#8217; case [2003] 3 SCC 472<br \/>\nit was not contemplated by the framers of the<br \/>\nConstitution or the Civil Procedure Code that<br \/>\ntwo departments of a State or Union of India<br \/>\nand\/or a department of the Government and a<br \/>\npublic sector undertaking fight a litigation in a<br \/>\ncourt of law. Such a course is detrimental to<br \/>\npublic interest as it entails avoidable wastage<br \/>\nof public money and time. These are all limbs<br \/>\nof the Government and must act in co-<br \/>\nordination and not confrontation. The<br \/>\nmechanism set up by this court is not, as<br \/>\nsuggested by Mr. Andhyarujina, only to<br \/>\nconciliate between Government Departments.<br \/>\nIt is also set up for purposes of ensuring that<br \/>\nfrivolous disputes do not come before courts<br \/>\nwithout clearance from the High Powered<br \/>\nCommittee. If it can, the High Powered<br \/>\nCommittee will resolve the dispute. If the<br \/>\ndispute is not resolved the Committee would<br \/>\nundoubtedly give clearance. However, there<br \/>\ncould also be frivolous litigation proposed by a<br \/>\ndepartment of the Government or a public<br \/>\nsector undertaking. This could be prevented by<br \/>\nthe High Powered Committee. In such cases<br \/>\nthere is no question of resolving the dispute.<br \/>\nThe Committee only has to refuse permission<br \/>\nto litigate. No right of the Department\/public<br \/>\nsector undertaking is affected in such a case.<br \/>\nThe litigation being of a frivolous nature must<br \/>\nnot be brought to court. To be remembered<br \/>\nthat in almost all cases one or the other party<br \/>\nwill not be happy with the decision of the High<br \/>\nPowered Committee. The dissatisfied party will<br \/>\nalways claim that its rights are affected, when<br \/>\nin fact, no right is affected. The Committee is<br \/>\nconstituted of highly placed officers of the<br \/>\nGovernment, who do not have an interest in<br \/>\nthe dispute, it is thus expected that their<br \/>\ndecision will be fair and honest. Even if the<br \/>\nDepartment\/public sector undertaking finds<br \/>\nthe decision unpalatable, discipline requires<br \/>\nthat they abide by it. Otherwise the whole<br \/>\npurpose of this exercise will be lost and every<br \/>\nparty against whom the decision is given will<br \/>\nclaim that they have been wronged and that<br \/>\ntheir rights are affected. This should not be<br \/>\nallowed to be done.&#8221;\n<\/p>\n<p>\tThe ONGC I to III cases (supra), Chief Conservator&#8217;s case<br \/>\n(supra) and Mahanagar Telephone&#8217;s case (supra) deal with<br \/>\ndisputes relating to Central Government, State Government<br \/>\nand Public Sector Undertakings. They have no application to<br \/>\nthe facts of these cases as the High Court has not indicated<br \/>\nany reason for its abrupt conclusion that the writ petitioners<br \/>\nare Public Sector Undertakings. In the absence of a factual<br \/>\ndetermination in that regard, the decisions can have no<br \/>\napplication.\n<\/p>\n<p>These aspects were recently highlighted in <a href=\"\/doc\/757704\/\">U.P.S.E.B.<br \/>\nand Anr. v. Sant Kabir Sahakari Katai Mills Ltd.<\/a> (2005 (7) SCC\n<\/p>\n<p>576).\n<\/p>\n<p>\tThe Division Bench of the High Court did not adopt the<br \/>\nmodalities indicated by this Court in the various decisions<br \/>\nreferred to above with the following reasoning:\n<\/p>\n<p>&#8220;Mr. Mitra supported the judgment of the<br \/>\nHon&#8217;ble Mr. Justice Dilip Kumar Seth delivered<br \/>\nin the court below and, with respect; we do not<br \/>\nfind anything to differ from His Lordship&#8217;s<br \/>\nviews in this matter.  We would, however, have<br \/>\nto add only one point thereto which we<br \/>\nconsider to be the deciding factor.\n<\/p>\n<p>\tThe respondent\/plaintiff  here has alleged<br \/>\nthat the Punjab &amp; Sind Bank (no doubt<br \/>\nvicariously, and because of persons working of<br \/>\nthe Bank) acted fraudulently, or at least<br \/>\nnegligently, and sent for clearing a cheque<br \/>\nwhich was worthless, and thus brought into<br \/>\ncirculation Rs.3.10 crore which should not<br \/>\nhave been brought into circulation at all.\n<\/p>\n<p>\tThese allegations have not yet been<br \/>\npronounced upon by any Civil Court.\n<\/p>\n<p>\tIf the above decision of the Government<br \/>\nCommittee for settlement of disputes is<br \/>\nbinding on the High Court, then and in that<br \/>\nevent, the High Court is not entitled to try the<br \/>\nsuit, and must exonerate the Punjab &amp; Sind<br \/>\nBank (and therefore indirectly all its then<br \/>\nconcerned employees) of both fraud and<br \/>\nnegligence.\n<\/p>\n<p>\tMr. Chatterjee submitted that one is not<br \/>\nremedy less, and in case the decision is not<br \/>\nreasonable, it could be challenged in<br \/>\nappropriate writ proceedings.\n<\/p>\n<p>\tBut the point which falls for decision is,<br \/>\ncan a Government Committee, which is only a<br \/>\npart of the administrative machinery of the<br \/>\nUnion of India, stop by its administrative<br \/>\ndecision, the judicial process of adjudication,<br \/>\nwhich is the job of that wing of the Union of<br \/>\nIndia, which is known as the judiciary.\n<\/p>\n<p>\tWe are of the opinion that the dicta in the<br \/>\nONGC&#8217;s case, if given their interned meaning,<br \/>\nwould, have the above effect, of impeding the<br \/>\njudicial process by having recourse to decision<br \/>\nof an administrative body, as the first and<br \/>\npermanent deciding body.\n<\/p>\n<p>We are of the opinion, and we say this<br \/>\nwith the greatest of respect, which is at our<br \/>\ncommand, that this is wholly unconstitutional.<br \/>\nIt is not necessary to enlarge on a matter so<br \/>\nfundamental because the separation of the<br \/>\nlegislature, the judiciary and the executive is<br \/>\nmore basis than anything else in our<br \/>\nConstitution as it stands today. We are<br \/>\naccordingly of the opinion, and this is again<br \/>\nsaid with as much respect before, that the<br \/>\ndecision in the ONGC&#8217;s case is itself of an<br \/>\nadministrative nature and has to force to<br \/>\nemasculate the judiciary.&#8221;\n<\/p>\n<p>\t\t\t\t(Underlined for emphasis)<\/p>\n<p>To say the least the view expressed by the Division Bench<br \/>\nof the High Court is confusing and patently shows that the<br \/>\nratio of the various decisions has not been understood in the<br \/>\nproper perspective.  To say that the decision in the ONGC-I<br \/>\ncase (supra) was of an administrative nature though a judicial<br \/>\norder shows non-application of mind.  Any order passed in a<br \/>\njudicial proceeding, (much less an order passed by this Court)<br \/>\ncan by no stretch of imagination be described as one of<br \/>\n&#8220;administrative nature&#8221;.\n<\/p>\n<p>In the circumstances we set aside the judgment of the<br \/>\nDivision Bench, remit the matter to the High Court for fresh<br \/>\nconsideration keeping in view the modalities and principles set<br \/>\nout by this Court in the various decisions referred to above.\n<\/p>\n<p>Appeal is allowed to the aforesaid extent with no order as<br \/>\nto costs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Punjab &amp; Sind Bank vs Allahabad Bank &amp; Anr on 28 March, 2006 Author: A Pasayat Bench: Arijit Pasayat, Tarun Chatterjee CASE NO.: Appeal (civil) 9688-9699 of 2003 PETITIONER: Punjab &amp; Sind Bank RESPONDENT: Allahabad Bank &amp; Anr DATE OF JUDGMENT: 28\/03\/2006 BENCH: ARIJIT PASAYAT &amp; TARUN CHATTERJEE JUDGMENT: J U [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-82517","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Punjab &amp; 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