IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE THIRTIETH DAY OF DECEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE GODA RAGHURAM and THE HON'BLE MR JUSTICE SANJAY KUMAR WRIT PETITION NO : 26573 of 2008 Between: Electronics Corporation of India Limited ECIL Post, Hyderabad - 500 062. Represented by its Managing Director Mr.K.S. Rajashekhara Rao, Aged 59 years, S/o. K.Satyanarayana Murthy, R/o. Hyderabad. ..... PETITIONER AND 1 Union of India, Cabinet Secretariat, Rashtrapati Bhavan, New Delhi represented by its Secretary (Litigation Cell). 2 Committee on Disputes, Union of India, Rep. by its Secretary (Coordination), Cabinet Secretariat, Rashtrapati Bhavan, New Delhi-110 004. 3 Central Board of Excise and Customs North Block, New Delhi 110001 Rep. by its Chairman. 4 Customs, Excise & Service Tax Appellate Tribunal Southern Region Bench, 1st Floor, WTC Buildings, FKCCI Complex, K.G. Road, Bangalore - 560 009 through its Registrar. 5 Commissioner of Customs and Central Excise Hyderabad III Commissionerate L.B. Stadium Road, Basheerbagh, Hyderabad - 500 004. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue a Writ of Certiorari or any other Writ or Order or Direction, calling for the records of the 2nd respondent relating to the proceedings dated 2-11-2006, 18-4-2007 and 12-6-2008 and quash the same and direct the 1st and 2nd respondents to permit the petitioner to pursue the appeal No.E/661/2006 before the fourth respondent and consequently direct the fourth respondent to decide the said appeal on merits and pass such further or other orders. Counsel for the Petitioner:MR.C.V.NARASIMHAM Counsel for the Respondent No.: MR.A.RAJASHEKAR REDDY (ASST SOLICITOR GEN) The Court made the following : THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NO.26573 OF 2008 ORDER: (Per Hon’ble Sri Justice Sanjay Kumar) By it’s amended prayer, Electronics Corporation of India Limited, Hyderabad, the petitioner herein, challenges the order dated 16.01.2007 passed by the Customs, Excise & Service Tax Appellate Tribunal (for brevity, ‘CESTAT’), South Zonal Bench, Bangalore, dismissing it’s appeal for want of a clearance certificate from the Committee on Disputes, the second respondent herein and seeks a consequential direction to the CESTAT, Bangalore, to hear and decide it’s appeal on merits without insisting on such clearance. The petitioner also seeks to assail the proceedings dated 02.11.2006, 18.04.2007 and 12.06.2008 of the Committee on Disputes, Union of India, whereby such clearance was denied to the petitioner to appeal to the CESTAT, Bangalore. The brief facts of the case germane to this adjudication are as follows: –– The petitioner, a Central Government Public Sector Undertaking, was assessed to duty under the Central Excise Act, 1944 and the Rules framed thereunder by the Order-in-Original No.6/2006 dated 27.02.2006 of the Commissioner of Customs & Central Excise, Hyderabad, the fifth respondent herein. Desirous of appealing against the said assessment order, the petitioner approached the Committee on Disputes, Union of India, seeking its clearance. However, the Committee on Disputes at its meeting held on 02.11.2006 decided to permit the petitioner to appeal only on one out of the three issues sought to be raised by it. The petitioner sought reconsideration of the decision taken by the Committee on Disputes. However by letter dated 18.04.2007 the order of the Committee on Disputes, Union of India, not to reconsider its earlier decision was communicated. Thereafter, the petitioner again made a fresh application dated 14.02.2008 to the Committee on Disputes requesting it to reconsider its decision stating that an identical case pertaining to Bharat Heavy Electricals Limited had been permitted to go before the Appellate Tribunal and had resulted in an order in its favour. However, this application was also rejected by the Committee on Disputes as demonstrated by the letter dated 12.06.2008 stating that there were no fresh developments necessitating review of its earlier decision. Thereafter, the petitioner’s appeal before the CESTAT numbered as Appeal No.E/661/2006 was rejected under order dated 16.01.2007 for want of clearance from the Committee on Disputes. Hence, this writ petition. The learned counsel for the petitioner contended that the petitioner’s case on merits was identical to that of Bharat Heavy Electricals Limited which had been permitted to go before the Appellate Tribunal. He argued that it was not open to the Committee on Disputes to deny permission to the petitioner to appeal to the CESTAT when it had a good case on merits and was assured of a fair chance of succeeding in the appeal. He contended that it was not for the Committee on Disputes to deny the petitioner the statutory remedy of appeal available to it and asserted that the proceedings dated 02.11.2006, 18.04.2007 and 12.06.2008 effaced this right of the petitioner. He therefore prayed for a direction to the CESTAT, Bangalore, to hear the petitioner’s appeal on merits without insisting upon clearance from the Committee on Disputes, Union of India. Per contra, Sri A.Rajashekhar Reddy, learned Assistant Solicitor General for India, submitted that it was not open to the petitioner to bypass the Committee on Disputes and seek adjudication of the matter by the CESTAT, Bangalore. He pointed out that the Committee on Disputes had been set up to resolve differences and disputes between the Government Departments/ Public Sector Undertakings of the Union of India, with a view to reduce such litigation coming before the Courts of law. He contended that once such Committee found the petitioner’s case unworthy of being litigated, it was not open to the petitioner to circumvent the said finding and seek adjudication of the matter by the CESTAT, Bangalore. Various Judgments of the Supreme Court on this aspect were placed before us. In OIL AND NATURAL GAS COMMISSION v. COLLECTOR OF CENTRAL EXCISE[1], the Supreme Court directed the Government of India to set up a Committee to monitor disputes between the Ministries/Public Sector Undertakings of the Government of India so as to ensure that no litigation came to a Court of law without the matter being first examined by such Committee and upon its clearance for litigation. It further stated that it would be the obligation of every Court to demand clearance from such Committee and in the absence of such clearance, not to proceed with the case. This Judgment was clarified by the Supreme Court in OIL AND NATURAL GAS COMMISSION v. COMMISSIONER OF CENTRAL EXCISE[2], stating that the machinery contemplated, being the Committee to be set up, was only to ensure that no litigation came to Court without the parties having had an opportunity of conciliation before an In-House Committee. With regard to the obligation of a Court to insist upon clearance from the Committee, the Supreme Court stated that where appeals, petitions, etc. were filed before a Court of law without clearance from the Committee so as to save limitation, such litigant should be given a month’s time to get the matter referred to the Committee. The Supreme Court also observed that if the High Powered Committee was unable to resolve the matter for reasons to be recorded by it, it should grant clearance for the litigation. The learned counsel for the petitioner relied upon a Division Bench Judgment of the Delhi High Court in CANARA BANK v. POWER GRID CORPORATION OF INDIA LTD.[3] wherein it was held that it was not open to the Committee to refuse clearance and that it had only two options – either to resolve the dispute or grant clearance for the litigation. Reliance was placed by the Delhi High Court upon the observations of the Supreme Court in the second OIL AND NATURAL GAS COMMISSION’s case in this regard. In MAHANAGAR TELEPHONE NIGAM LTD. v. CHAIRMAN, C.B.D.T.[4], the Supreme Court was dealing with the contention that if the Committee was unable to resolve the dispute, it must grant leave to approach a Court of law as otherwise, valuable rights of the Public Sector Undertakings/Departments to approach a Court of law would be effaced and such party would be left remediless. The Supreme Court in this context observed as follows: “8. 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 C.P.C. 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 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 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.” In the light of the unequivocal enunciation of the law on the subject by the Supreme Court in MAHANAGAR TELEPHONE NIGAM LTD.’s case (3 supra), we must hold that it is not open to the petitioner to prosecute its appeal before the CESTAT, Bangalore, without producing necessary clearance from the Committee on Disputes. The observations of the Supreme Court in MAHANAGAR TELEPHONE NIGAM LTD.’s case clearly demonstrate that it is for the Committee to identify frivolous litigation proposed by a Department/Public Sector Undertaking of the Union of India and prevent such litigation from being canvassed before a Court of law. In the present case it is noticed that the Committee on Disputes, Union of India, was apprised of the stand of the petitioner with regard to it’s alleged parity with Bharat Heavy Electricals Limited insofar as the merits of it’s case are concerned. Having considered this aspect also, the Committee on Disputes stood firm on its earlier decision not to permit the petitioner to litigate the matter. This decision of the Committee on Disputes is binding on the petitioner as indicated by the Supreme Court and cannot be canvassed by way of the present writ petition. The same would run counter to the very concept of having a Committee on Disputes as a mandatory stepping stone to litigative processes before the Courts of law. We are therefore of the considered opinion that in the light of the authoritative pronouncement of the Supreme Court in MAHANAGAR TELEPHONE NIGAM LTD.’s case, the petitioner’s writ petition must fail. It is accordingly dismissed. In the circumstances of the case, there shall be no order as to costs. _______________________ GODA RAGHURAM, J. ____________________ SANJAY KUMAR, J. ___________ December, 2008. VGSR [1] 1992 (61) ELT 3 (SC) [2] 1994 (70) ELT 45 (SC) [3] 1997 (96) ELT 37 (Del.) [4] 2004 (168) ELT 147 (SC)