Case: Canara Bank  Vs. National Thermal Power Corpn.

facts of the present case. 9. In ONGCs case the Cabinet Secretary was shown to have taken appropriate initiative as per direction of the Court dated 11.9.1991 and reported to the Court that the dispute between the Government Department and the public sector undertaking of the Union of India had been settled. In that view of the matter no further action was taken on the petition. The Cabinet Secretary in his Report had stated : "I would also like to state that the Government respects the views expressed this Honourable Court and has accepted them that public undertakings of Central Government and the Union of India should not fight their litigation in Court by spending money on fees on counsel, Court fees, procedural expenses and wasting public time. It is in this context that the Cabinet Secretary has issued instructions from time to time to all Departments of the Government of India as well as to public undertakings of the Central Government to the effect that all disputes, regardless of the type, should be resolved amicably by mutual consultation or through the goods offices of empowered agencies of the Government or through arbitration and recourse to litigation should be eliminated." 10. In the light of the Report of the Cabinet Secretary this Court directed as under : "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 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. 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 shall be the obligation of every Court and every Tribunal where such a dispute is raised hereafter to demand a clearance from the Committee in case it has not been so pleaded and in the absence of the clearance, the proceedings would not be proceeded with. The Committee shall function under the ultimate control of the Cabinet Secretary but his delegate may look after the matters. This Court would expect a quarterly report about the functioning of this system to be furnished to the Registry beginning from 1.1.1992." 11. What the Court has directed in ONGCs case is that frivolous litigation between Government Departments and Public Sector Undertakings of the Union of India should not be dragged in the Courts and be amicably resolved by the Committee. The judgment is intended to prevent avoidable litigation between the Government Departments and the Undertakings of the Union of India. In the present litigation there does not appear to be a genuine dispute between the Government of India undertakings. In this case one of the public sector undertaking is shown to be acting not as an undertaking but as Trustee of a Trust. The Board was, therefore, justified in holding "that the real litigation in this case, therefore, is between Mutual Fund and NTPC" and not between the two undertakings. The meaning of word "dispute" is, `a controversy having both positive and negative aspects. It postulates the assertion of a claim by one party and its denial by the other. In the instant case the claim preferred on behalf of the CBMF was not denied by the Corporation but in turn a counter claim with respect to the liability of a subsidiary of the Bank was raised. The dispute raised is without laying any basis or placing on record any evidence in support thereof. Imaginative disputes raised only to defeat the undisputed claim of the Trustee could not be made basis to deprive the Trustees and ultimately the public at large, of the value of the bonds which had, admittedly, been received by the Corporation with unambiguous undertaking to repay back the same. 12. A perusal of the bonds, purchased by the appellants, would indicate that such bonds were termed and styled as "Instrument of Bond in the nature of promissory bond". The Corporation had agreed "to pay on demand to the above named bond-holder or order the sum of ......". In other words the bonds were transferable and respondents undertaking, under a contractual and statutory obligation, to pay the value thereof to the transferee. Such a transferee could not be denied the payment of the value of the bonds on the ground of the liability of the transferor or any of its subsidiary. The perusal of the bond incorporating the condition of payment unambiguously shows that no dispute can be raised by the Corporation for payment of the amount on demand to its holder or order. The claim of the Corporation, if any, can be enforced separately against the subsidiary of the Canara Bank but cannot be made a ground to resist the claim of the appellants. We are of the opinion that the High Court was not right in referring the alleged disputes to the High Powered Committee with the aid of judgment in ONGCs case. It was under an obligation to give a finding with regard to the directions give by the Board to pay the redemption amount to the appellants. The Trustees of the Trust constituted by the Canara Bank as Settlor for the benefit of numerous units holders cannot be termed and styled as Government Company or Public Sector Undertaking. The dispute raised by the respondents with the appellant was imaginary and even prima facie not real. We are further of the opinion that the Board in its order had dealt with all aspects of the matter and rightly concluded that ONGCs judgment was not applicable in the facts and circumstances of the present case.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]11. What the Court has directed in ONGCs case is that frivolous litigation between Government Departments and Public Sector Undertakings of the Union of India should not be dragged in the Courts and be amicably resolved by the Committee. The judgment is intended to prevent avoidable litigation between the Government Departments and the Undertakings of the Union of India. In the present litigation there does not appear to be a genuine dispute between the Government of India undertakings. In this case one of the public sector undertaking is shown to be acting not as an undertaking but as Trustee of a Trust. The Board was, therefore, justified in holding "that the real litigation in this case, therefore, is between Mutual Fund and NTPC" and not between the two undertakings. The meaning of word "dispute" is, `a controversy having both positive and negative aspects. It postulates the assertion of a claim by one party and its denial by the other. In the instant case the claim preferred on behalf of the CBMF was not denied by the Corporation but in turn a counter claim with respect to the liability of a subsidiary of the Bank was raised. The dispute raised is without laying any basis or placing on record any evidence in support thereof. Imaginative disputes raised only to defeat the undisputed claim of the Trustee could not be made basis to deprive the Trustees and ultimately the public at large, of the value of the bonds which had, admittedly, been received by the Corporation with unambiguous undertaking to repay back the same12. A perusal of the bonds, purchased by the appellants, would indicate that such bonds were termed and styled as "Instrument of Bond in the nature of promissory bond". The Corporation had agreed "to pay on demand to the above namedr or order the sum of ......". In other words the bonds were transferable and respondents undertaking, under a contractual and statutory obligation, to pay the value thereof to the transferee. Such a transferee could not be denied the payment of the value of the bonds on the ground of the liability of the transferor or any of its subsidiary. The perusal of the bond incorporating the condition of payment unambiguously shows that no dispute can be raised by the Corporation for payment of the amount on demand to its holder or order. The claim of the Corporation, if any, can be enforced separately against the subsidiary of the Canara Bank but cannot be made a ground to resist the claim of the appellants. We are of the opinion that the High Court was not right in referring the alleged disputes to the High Powered Committee with the aid of judgment in ONGCs case. It was under an obligation to give a finding with regard to the directions give by the Board to pay the redemption amount to the appellants. The Trustees of the Trust constituted by the Canara Bank as Settlor for the benefit of numerous units holders cannot be termed and styled as Government Company or Public Sector Undertaking. The dispute raised by the respondents with the appellant was imaginary and even prima facie not real. We are further of the opinion that the Board in its order had dealt with all aspects of the matter and rightly concluded that ONGCs judgment was not applicable in the facts and circumstances of the present case.