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Issues: (i) Whether the plaint could be rejected under Order 7 Rule 11(d) of the Code of Civil Procedure, 1908 for want of clearance from the Committee on Disputes; (ii) whether the dispute between the two public sector corporations should be referred for adjudication in accordance with law.
Issue (i): Whether the plaint could be rejected under Order 7 Rule 11(d) of the Code of Civil Procedure, 1908 for want of clearance from the Committee on Disputes.
Analysis: The filing of the suit was not barred merely because prior clearance from the Committee on Disputes had not been obtained. The earlier directions governing disputes between public sector undertakings only restricted further progress in the proceedings until clearance was obtained, and did not render institution of the suit illegal. Since the Committee on Disputes stood abrogated and the directions constituting it had been recalled, insisting on such clearance at the stage of adjudication was unsustainable. The rejection of the plaint on that ground therefore rested on an understanding of the earlier orders.
Conclusion: The plaint could not be rejected for want of Committee on Disputes clearance.
Issue (ii): Whether the dispute between the two public sector corporations should be referred for adjudication in accordance with law.
Analysis: The award made under the permanent administrative machinery was outside the statutory arbitration framework and, once challenged, did not finally and effectually resolve the dispute in accordance with law. The appellant retained the right to seek adjudication through a lawful arbitral process notwithstanding its participation in the earlier mechanism. In the circumstances, a fresh reference to a sole arbitrator was the appropriate course to secure an effective resolution of all claims and counterclaims between the corporations.
Conclusion: The disputes were directed to be referred to a sole arbitrator for adjudication in accordance with law.
Final Conclusion: The High Court's rejection of the plaint was set aside and the matter was channelled into a fresh arbitration between the two corporations, with the connected civil suit disposed of accordingly.
Ratio Decidendi: Institution of a suit by a public sector undertaking is not barred for want of Committee on Disputes clearance where the governing directions only suspended further proceedings, and a non-statutory administrative award does not preclude lawful adjudication of the dispute afresh.
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