WP/26573/2008 of Electronics Corporation of India Limited ECIL Post, Vs Union of India, Cabinet Secretariat, on 30 December 2008

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD

(Special Original Jurisdiction)

TUESDAY, THE THIRTIETH DAY OF DECEMBERTWO THOUSAND AND EIGHT

PRESENTTHE HON'BLE MR JUSTICE GODA RAGHURAMand 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, NewDelhi 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 Delhi110001 Rep. by its Chairman.110001 Rep. by its Chairman.

4 Customs, Excise & Service Tax Appellate Tribunal SouthernRegion Bench, 1st Floor, WTC Buildings,Region Bench, 1st Floor, WTC Buildings, FKCCI Complex, K.G. Road, Bangalore - 560 009 through itsRegistrar.Registrar.

5 Commissioner of Customs and Central Excise Hyderabad IIICommissionerate L.B. Stadium Road,Commissionerate L.B. Stadium Road, Basheerbagh, Hyderabad - 500 004.

.....RESPONDENT(S)

Petition under Article 226 of the constitution of India praying thatin the circumstances stated in the Affidavit filed herein the High Courtwill be pleased to to issue a Writ of Certiorari or any other Writ or Orderor Direction, calling for the records of the 2nd respondent relating tothe proceedings dated 2-11-2006, 18-4-2007 and 12-6-2008 andquash the same and direct the 1st and 2nd respondents to permit thepetitioner to pursue the appeal No.E/661/2006 before the fourthrespondent and consequently direct the fourth respondent to decidethe 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 RAGHURAMANDTHE 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 dated16.01.2007 passed by the Customs, Excise & Service Tax AppellateTribunal (for brevity, ‘CESTAT’), South Zonal Bench, Bangalore,dismissing it’s appeal for want of a clearance certificate from theCommittee on Disputes, the second respondent herein and seeks aconsequential direction to the CESTAT, Bangalore, to hear and decideit’s appeal on merits without insisting on such clearance. Thepetitioner also seeks to assail the proceedings dated 02.11.2006,18.04.2007 and 12.06.2008 of the Committee on Disputes, Union ofIndia, whereby such clearance was denied to the petitioner to appealto the CESTAT, Bangalore.

The brief facts of the case germane to this adjudication are asfollows: ––

The petitioner, a Central Government Public Sector Undertaking,was assessed to duty under the Central Excise Act, 1944 and theRules framed thereunder by the Order-in-Original No.6/2006 dated27.02.2006 of the Commissioner of Customs & Central Excise,Hyderabad, the fifth respondent herein. Desirous of appealing againstthe said assessment order, the petitioner approached the Committeeon Disputes, Union of India, seeking its clearance. However, the Committee on Disputes at its meeting held on 02.11.2006 decided topermit the petitioner to appeal only on one out of the three issuessought to be raised by it.

The petitioner sought reconsideration of the decision taken bythe Committee on Disputes. However by letter dated 18.04.2007 theorder of the Committee on Disputes, Union of India, not to reconsiderits earlier decision was communicated. Thereafter, the petitioner againmade a fresh application dated 14.02.2008 to the Committee onDisputes requesting it to reconsider its decision stating that anidentical case pertaining to Bharat Heavy Electricals Limited had beenpermitted to go before the Appellate Tribunal and had resulted in anorder in its favour. However, this application was also rejected by theCommittee on Disputes as demonstrated by the letter dated12.06.2008 stating that there were no fresh developmentsnecessitating review of its earlier decision. Thereafter, the petitioner’sappeal before the CESTAT numbered as Appeal No.E/661/2006 wasrejected under order dated 16.01.2007 for want of clearance from theCommittee on Disputes. Hence, this writ petition.

The learned counsel for the petitioner contended that thepetitioner’s case on merits was identical to that of Bharat HeavyElectricals Limited which had been permitted to go before theAppellate Tribunal. He argued that it was not open to the Committeeon Disputes to deny permission to the petitioner to appeal to theCESTAT when it had a good case on merits and was assured of a fairchance of succeeding in the appeal. He contended that it was not forthe Committee on Disputes to deny the petitioner the statutory remedyof appeal available to it and asserted that the proceedings dated02.11.2006, 18.04.2007 and 12.06.2008 effaced this right of thepetitioner. He therefore prayed for a direction to the CESTAT,Bangalore, to hear the petitioner’s appeal on merits without insistingupon 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 tobypass the Committee on Disputes and seek adjudication of the matterby the CESTAT, Bangalore. He pointed out that the Committee onDisputes had been set up to resolve differences and disputes betweenthe Government Departments/ Public Sector Undertakings of theUnion of India, with a view to reduce such litigation coming before theCourts of law. He contended that once such Committee found thepetitioner’s case unworthy of being litigated, it was not open to thepetitioner to circumvent the said finding and seek adjudication of thematter by the CESTAT, Bangalore.

Various Judgments of the Supreme Court on this aspect wereplaced before us.

In OIL AND NATURAL GAS COMMISSION v. COLLECTOR

OF CENTRAL EXCISE[[1]], the Supreme Court directed theGovernment of India to set up a Committee to monitor disputesbetween the Ministries/Public Sector Undertakings of the Governmentof India so as to ensure that no litigation came to a Court of law withoutthe matter being first examined by such Committee and upon itsclearance for litigation. It further stated that it would be the obligation ofevery Court to demand clearance from such Committee and in theabsence of such clearance, not to proceed with the case.

This Judgment was clarified by the Supreme Court in OIL ANDNATURAL GAS COMMISSION v. COMMISSIONER OF CENTRAL

EXCISE[[2]], stating that the machinery contemplated, being theCommittee to be set up, was only to ensure that no litigation came toCourt without the parties having had an opportunity of conciliationbefore an In-House Committee. With regard to the obligation of a Courtto insist upon clearance from the Committee, the Supreme Court statedthat where appeals, petitions, etc. were filed before a Court of lawwithout clearance from the Committee so as to save limitation, suchlitigant should be given a month’s time to get the matter referred to the Committee. The Supreme Court also observed that if the HighPowered Committee was unable to resolve the matter for reasons tobe recorded by it, it should grant clearance for the litigation.

The learned counsel for the petitioner relied upon a DivisionBench Judgment of the Delhi High Court in CANARA BANK v.

POWER GRID CORPORATION OF INDIA LTD.[[3]]wherein it washeld that it was not open to the Committee to refuse clearance and thatit had only two options – either to resolve the dispute or grantclearance for the litigation. Reliance was placed by the Delhi HighCourt upon the observations of the Supreme Court in the second OILAND 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 ifthe Committee was unable to resolve the dispute, it must grant leave toapproach a Court of law as otherwise, valuable rights of the PublicSector Undertakings/Departments to approach a Court of law would beeffaced and such party would be left remediless. The Supreme Courtin this context observed as follows:

“8. Undoubtedly, the right to enforce a right in a Court of lawcannot be effaced. However, it must be remembered that Courts areoverburdened with a large number of cases. The majority of suchcases pertain to Government Departments and/or Public SectorUndertakings. As is stated in Chief Conservator of Forests’ case[(2003) 3 SCC 472] it was not contemplated by the framers of theConstitution or C.P.C. that two departments of a State or Union ofIndia and/or a department of the Government and a Public SectorUndertaking fight a litigation in a Court of law. Such a course isdetrimental to public interest as it entails avoidable wastage of publicmoney and time. These are all limbs of the Government and must actin co-ordination and not confrontation. The mechanism set up by thisCourt is not as suggested by Mr.Andhyarujina only to conciliatebetween the Government Departments. It is also set up for purposesof ensuring that frivolous disputes do not come before Courts withoutclearance from the High Powered Committee. If it can, the HighPowered Committee will resolve the dispute. If the dispute is notresolved the Committee would undoubtedly give clearance. Howeverthere could also be frivolous litigation proposed by a department of

the Government or a Public Sector Undertaking. This could beprevented by the High Powered Committee. In such cases there isno question of resolving the dispute. The Committee only has torefuse permission to litigate. No right of the Department/Public SectorUndertaking is affected in such a case. The litigation being of afrivolous nature must not be brought to Court. To be remembered thatin almost all cases one or the other party will not be happy with thedecision of the High Powered Committee. The dissatisfied party willalways claim that its rights are affected, when in fact, no right isaffected. The Committee is constituted of highly placed officers of theGovernment, who do not have an interest in the dispute, it is thusexpected that their decision will be fair and honest. Even if theDepartment/Public Sector Undertaking finds the decision unpalatable,discipline requires that they abide by it. Otherwise the whole purposeof this exercise will be lost and every party against whom thedecision is given will claim that they have been wronged and that theirrights are affected. This should not be allowed to be done.”

In the light of the unequivocal enunciation of the law on thesubject by the Supreme Court in MAHANAGAR TELEPHONENIGAM LTD.’s case (3 supra), we must hold that it is not open to thepetitioner to prosecute its appeal before the CESTAT, Bangalore,without producing necessary clearance from the Committee onDisputes. The observations of the Supreme Court in MAHANAGARTELEPHONE NIGAM LTD.’s case clearly demonstrate that it is for theCommittee to identify frivolous litigation proposed by aDepartment/Public Sector Undertaking of the Union of India andprevent such litigation from being canvassed before a Court of law. Inthe present case it is noticed that the Committee on Disputes, Union ofIndia, was apprised of the stand of the petitioner with regard to it’salleged parity with Bharat Heavy Electricals Limited insofar as themerits of it’s case are concerned. Having considered this aspect also,the Committee on Disputes stood firm on its earlier decision not topermit the petitioner to litigate the matter. This decision of theCommittee on Disputes is binding on the petitioner as indicated by theSupreme Court and cannot be canvassed by way of the present writpetition. The same would run counter to the very concept of having aCommittee 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 theauthoritative pronouncement of the Supreme Court in MAHANAGARTELEPHONE NIGAM LTD.’s case, the petitioner’s writ petition mustfail. It is accordingly dismissed. In the circumstances of the case, thereshall be no order as to costs.

_______________________

GODA RAGHURAM, J.

____________________

SANJAY KUMAR, J.

___________ December, 2008.

VGSR

[1] 1992 (61) ELT 3 (SC) 1992 (61) ELT 3 (SC)

[2] 1994 (70) ELT 45 (SC) 1994 (70) ELT 45 (SC)

[3] 1997 (96) ELT 37 (Del.) 1997 (96) ELT 37 (Del.)

[4] 2004 (168) ELT 147 (SC) 2004 (168) ELT 147 (SC)