Relevance of COD in today's context

Is there a Need for Committee on Disputes any more?.

Background: The Honorable Supreme Court of India, vide its order in the case of Oil and Natural Gas Commission V Collector of Central Excise dated 11^th October 1991 ordered for the setting up of the high powered Committee on Disputes for resolving the disputes between two ministries of Government of India or between a ministry and a Central PSU or between two central PSUs. The basic purpose for setting up the above committee was to ensure that no litigation comes to Court or to a Tribunal without the matter having been examined by the Committee and its clearance for litigation. It was abundantly made 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 order of the Honorable Supreme Court categorically states that if the High Power Committee is unable to resolve the matter for reasons to be recorded by it, it shall grant clearance for litigation. (Reference- Supplementary order dated 07/01/1994.)

What is happening: Even though the Committee on Dispute is in place for several years, it is gathered that in most of the cases, it either gives clearance or declines clearances. Only in rare cases, an attempt is made by the Committee to actually resolve the issues.

Issues which are not clear. Though the Committee is in place for many years, the following issues have not been made clear.

01) Whether one has to apply for COD clearance again, in case desired relief is not given by the Tribunal and an appeal is preferred to the next level ?

02) Whether one has to apply for COD clearance again, in case the matter is remanded to assessing authority and due to confirmation of earlier assessment in remand, an appeal is preferred in Tribunal again.

03) It is gathered that there is no clear cut guidelines for denial of clearance. Amounts involving around Rs.10 Lacs are declined clearance to PSUs on the ground that amount in dispute is not significant, whereas CBEC is permitted for cases involving amount of less that Rs one Lac. It is high time that an amount be fixed below which cases should not be referred to COD so that time and efforts of COD are saved.

Real Question:  The real question for which this article is made is whether the Committee on Disputes has powers to decline clearance?. This question is significant on account of the following:

01) The Honorable Supreme Court  in para No 6 of its order dated 07/01/1994, states that If the High Power Committee is unable to resolve the matter for reasons to be recorded by it, it shall grant clearance for the litigation.  Thus it is clear from the order of the Honorable Supreme Court that the Committee has no powers to decline clearance to a PSU.

02) The Honorable High Court of Delhi, in the case of Canara bank Versus Power Grid Corporation of India Ltd (Reported in 1997(96) E L T 37(Del)) has held that High Power Committee has only two options either to resolve the dispute or to grant clearance for the litigation - Article 226 of the Constitution of India.

It has been made abundantly clear in the case of Canara Bank Vs PGCIL that it does not lie with the High Power Committee to refuse clearance as it has only two options- either to resolve the dispute or to grant clearance for the litigation.

The present need: It is gathered that in the recent past, the decline of clearances by COD especially to PSUs has gone up tremendously. From decline of clearances of cases involving few lacs, presently the amount involved in declined cases are in Crores. Due to the above trend in the Committee on Disputes, several PSUs have stopped coming to COD, unless the amount is very huge. Is it legally and logically correct for the COD to decline clearances to PSUs?. The need today is an answer to the above question.

Is it fair even now?. This concept was good at that time when the Government was holding 100% of the equity in PSUs. The time has changed and many PSUs equity is partly held by the General Public. By arbitrary denial of clearance by COD, is not the interest of the shareholders of PSU affected?. 

Conclusion: The above article is only to pass this message to all concerned through publication so that it invites some attention by the concerned.

 An article by CA.Amutha Balasubramanian.

(The author is a Chartered Accountant. The views expressed by her are her personal views and based on the decisions of Supreme Court and Delhi High Court in the referred cases. She may be contacted by e mail - [email protected] ).