The main legal point established in the judgment is the need to avoid litigation between government departments and public sector undertakings, and the establishment of committees to resolve disputes before approaching the court.

Headnote:
ONGC - I - Bank Suit - ONGC - I, ONGC - II, ONGC - III, Chief Conservator case, Mahanagar Telephone case - The court discussed the modalities and principles set out in ONGC - I, ONGC - II, ONGC - III, Chief Conservator case, and Mahanagar Telephone case, emphasizing the need to avoid litigation between government departments and public sector undertakings, and the establishment of committees to resolve disputes before approaching the court.
Fact of the Case:

The suit was filed by Respondent 1 Bank against the appellant Bank and 11 other defendants seeking various reliefs. The appellant Bank filed an application for dismissal of the suit based on the modalities indicated in ONGC - I case not being followed. The Single Judge held that the decision in ONGC - I case was not intended to extinguish the right to sue, but to avoid litigation when the parties are the Government or its undertakings. The Division Bench affirmed the view of the Single Judge, but the appellant challenged the decision.
Finding of the Court:

The Division Bench's view was set aside as it showed a misunderstanding of the modalities and principles set out in the various decisions referred to above. The matter was remitted to the High Court for fresh consideration keeping in view the modalities and principles set out by the Supreme Court in the mentioned decisions.
Issues: The main issue was the correct interpretation and application of the modalities and principles set out by the Supreme Court in ONGC - I, ONGC - II, ONGC - III, Chief Conservator case, and Mahanagar Telephone case.
Ratio Decidendi: The court emphasized the need to avoid litigation between government departments and public sector undertakings, and the establishment of committees to resolve disputes before approaching the court. It also clarified that the decisions in the mentioned cases were not intended to extinguish the right to sue, but to avoid unnecessary litigation.
Final Decision: The appeals were allowed to the extent of setting aside the judgment of the Division Bench, and the matter was remitted to the High Court for fresh consideration.

ARIJIT PASAYAT, J. - Challenge in these appeals is to the judgment delivered by a Division Bench of the Calcutta High Court, in an appeal filed by the appellant, the defendant in the suit filed by Respondent 1 Bank. The learned Single Judge in the said suit held that there was no need to adopt procedure indicated by this Court in ONGC v. CCEI (described hereinafter as ONGC - I case). The Division Bench affirmed the view of the learned Single Judge. The correctness of the view expressed by the learned Single Judge and the Division Bench forms the subject - matter of challenge in this appeal.

2. The suit was filed by Respondent 1 Bank against the appellant Bank along with 11 other defendants with the following prayers:

(a) Declaration that the bankers cheque copy whereof is annexed marked A hereto is void and not binding on the plaintiff.

(b) Decree of Rs 5,62,66,671 against the defendants jointly and/or severally and/or such of them for such amount as this Honble Court may deem fit and proper.

(d) Interest including interim interest as claimed in para 29.

(e) Receiver.

(f) Costs.

(g) Further any other reliefs.

3. An application was filed by the appellant Bank for dismissal of the suit on the ground that the modalities indicated in ONGC - I easel were not followed. The learned Single Judge held that the decision has to be read in the context which was passed. This Court never intended to extinguish the right to sue. Intention was to avoid litigation when the parties are the Government or its undertakings.

4. The order was challenged before the Division Bench which, inter alia, upheld the view of the learned Single Judge with some additional reasons. We shall deal with the reasoning in detail later.

5. The view in ONGC - I casel was further elaborated in ONGC v. CCE2 (for the sake of convenience described as ONGC - II). It was noted in ONGC v. CCE3 (for convenience described as ONGC - III) that some doubts and problems arose in the working out of the arrangements in terms of the order of this Court dated 11 - 10 - 1991 in ONGC - II case2. It was noted in ONGC - III case3 as follows: (SCC pp. 438 - 39, para 4)

"4. There are some doubts and problems that have arisen in the working out of these arrangements which require to be clarified and some creases ironed out. Some doubts persist as to the precise import and implications of the words and recourse to litigation should be avoided.

It is clear that the order of this Court is not to the effect that - nor can that be done - so far as the Union of India and its statutory corporations c are concerned, their statutory remedies are effaced. Indeed, the purpose of the constitution of the High - Powered Committee was not to take away those remedies. The relevant portion of the order reads: (SCC pp. 541 - 42, para 3)

3. We direct that the Government of India shall set up a committee consisting of representatives from the Ministry of d Industry, the Bureau of Public Enterprises and the Ministry of Law, to monitor disputes between Ministry and Ministry of the 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 e Committee and its clearance for litigation. The 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 is abundantly clear that the machinery contemplated is only to ensure f, that no litigation comes to court without the parties having had an opportunity of conciliation before an in - house committee."

(emphasis in original)

6. The matter was again examined in Chief Conservator of Forests v. Collector4. In paras

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2006 Supreme(SC) 220

The main legal point established in the judgment is the need to avoid litigation between government departments and public sector undertakings, and the establishment of committees to resolve disputes before approaching the court.

Cases Referred (6)