Transferable securities and redemption rights cannot be blocked by public sector dispute procedures where the real claimant is entitled to enforce payment.

Transferable bonds carrying an undertaking to pay the bond-holder or order gave the registered claimant an enforceable contractual and statutory right to redemption. The dispute-resolution mechanism designed for genuine inter-governmental or public sector conflicts could not be used to defeat a bona fide claim where the real controversy was between the mutual fund and the issuing corporation, and the fund held the bonds through a bank only in a trustee capacity. The statutory bar on recognising trusts in the register did not prevent relief on these facts, and the order directing rectification of the bond register and payment of redemption proceeds was restored.

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Issues: Whether the High Court was justified in applying the dispute-resolution mechanism in ONGC and referring the matter to the High-Powered Committee instead of affirming the order directing rectification of the bond register and payment of redemption proceeds.

Analysis: The bonds were transferable instruments carrying an undertaking to pay the bond-holder or order, and the registered claimant was entitled to enforce that contractual and statutory obligation. The objection raised by the respondent was not found to be a real inter-public-sector dispute; the mutual fund held the bonds through Canara Bank only in a trustee capacity, and the claim for redemption could not be defeated by attempting to raise speculative liability issues concerning another entity. The ONGC mechanism was meant to prevent genuine avoidable litigation between Government departments and public sector undertakings, not to block adjudication where the real controversy was between the mutual fund and the issuing corporation. The statutory bar against recognising trusts in the register did not prevent relief on the facts from being granted by the Board.

Conclusion: The High Court was not justified in referring the matter to the High-Powered Committee, and the order of the Company Law Board directing relief to the appellants was restored.

Ratio Decidendi: A dispute-resolution mechanism meant for genuine inter-governmental or public sector disputes cannot be invoked to defeat a bona fide claim on transferable securities where the real controversy is not between two Government undertakings in the relevant sense.

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