Holding

There is no rigid one‑month time limit for obtaining COD clearance; a delay does not make the filing illegal, and the COD must consider the dispute on its merits.

Summary

The Commissioner of Income Tax (Delhi-VI) appealed against Oriental Insurance Co. Ltd., contending that the Revenue must obtain clearance from the Committee of Disputes (COD) within one month before filing appeals against a public sector undertaking. The Delhi High Court dismissed the appeals for not securing such clearance within the stipulated period. The Supreme Court held that there is no rigid one‑month deadline; the emphasis on urgency does not make a delayed approach illegal, and the COD must consider the matter on its merits. The Court observed that a mere delay does not amount to lethargy or indifference warranting refusal of jurisdiction. Consequently, the High Court’s order was set aside and the matter was directed to be reconsidered after the COD’s report. The appeals were partly allowed, with no order as to costs.

Issues considered

Whether the Revenue must obtain clearance from the Committee of Disputes within one month before filing an appeal or petition against a public sector undertaking.
Whether a delay in approaching the Committee renders the filing of the appeal illegal.
Whether the court must refuse to entertain a matter if the Committee declines permission on the ground of belated approach.

Legislation cited

Income Tax Act, 1961s. 44

Subjects

Income TaxPublic Sector UndertakingCommittee of Disputesclearance requirementtime limiturgencyappeal jurisdictionlitigation against government

Judgment

[2008] 108.C.R.1154
- 'r

A ·COMMISSIONER OF INCOME TAX, DELHI-VI
v.
MIS ORIENTAL INSURANCE CO. LTD.
(Civil Appeal No. 4521 Of 2008)
JULY 18, 2008
B "'+-"
[DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ]

. Government Litigation - Disputes between the Govern-
ment and the Public Sector Undertakings - Dismissal of
c Rev~nue's appeal by High Court for not obtaining clearance
from Committee of Disputes for litigation within one month from
the date of filing appeal - On appeal;· held: There is no rigid
time frame - Authorities have to take urgent action - Mere
delay In approaching the Committee does not make the ac-
tion illegal ..:.. Court is to test whether there was any indiffer-
D
ence C!n.d ieth'argy and in appropriate cases refuse to interfere -:... 1.-
- On facts, such was not the position - Thus, order of High
Court·
'
set aside - High Court to consider whether to proceed
'

in the .matter on receipt of Committee's report.
E The question which arose for consideration in these
appeals was whether the High Court erred in dismissing
the Revenue's appeal holding thatsince the dispute was
between the· Government-Income Tax Department ahd
Public Sector Undertakings-Insurance Company, the De- ~
F partment was to obtain clearance from the Committee of
Disputes within one month from the date of filing the ap- ~

peal and the same was not done. .
~

;
Partly allowing the appeals, the Court
HELD: _1.1 There was actually no rigid time frame in- !
G
dicated by Supreme Court. The emphasis on one month's
time was to show urgency needed. Merely because there
is some delay in approaching the Committee that does "
not make the action illegal. The Committee is required to
H 1154
COMMISSIONER OF INCOME TAX, DELHI-VI v. MIS 1155
ORIENTAL INSURANCE CO. LTD.

deal with the matter expeditiously so that there is no un- A
necessary backlog of appeals which ultimately may not
be pursued. In that sense, it is imperative that the con-
cerned authorities take urgent action as otherwise the
intended objective would be frustrated. There is no scope·
+ for lethargy. It is to be tested by the Court as to whether' B
there was any indifference and lethargy and in appropri-
ate cases refuse to interfere. In these cases factual posi- '
tion is not that. Therefore, the order of the High Court in ·
each case is set aside and this Court directs consider-·
ation of the question of desirability to proceed in the mat-· c
ter before it on receipt of the report from the concerned
Committee. (Para 10) [1160-A,8,C]
1.2 No opinion is expressed with regard to the sub-
mission that even if the Committee has declined to grant
:I permission it is still open to raise the issues in appropri- D
ate proceedings. But where the Committee has declined
to deal with the matter on the ground of belated approach,
the same cannot be sustained in view of the present or-
der. The Committee has to consider the matter on merits.
(Para 11) [1160-0,E] E
1.3 Where permission has been granted by the Com- ,
mittee there is no impediment on the Court to examine ,
the matter and take a decision on merits. But where there ,
is no belated approach, the matter has to be decided. The
Court has to decide whether because of unexplained de- F
.... lay and lethargic action it would decline to entertain the
matters. That would depend on the factual scenario in each .
case, and no straight jacket formula can be adopted. (Para .
12) [1160-E,F,G]
' Oil and Natural Gas Commission v. Collector of Central ·
G

,. Excise 2004 (6) SCC 437; Oil and Natural Gas Commission
and Anr. V Collector of Central Excise 1995 Supp (4) SCC
541; Oil and Natural Gas Corporation Ltd. V City & Industrial
Development Corporation, Maharashtra Ltd. And Ors. 2007
H•
1156 SUPREME COURT REPORTS [2008] 10 S.C.R.
f'

A (7) sec 39 ....:. referred to.
Case Law Reference
2004 (6) SCC 437 Referred to. Paras 2 and 5
1995 Supp (4) SCC 541 Referred to. Paras 6 and 7 --'+-
B
2007 (7) SCC 39 Referred to. Para 9
,._
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 4521
of 2008 ·

c From the final Judgment and Order dated 22.9.2005 of
the High Courtof Delhi at New Delhi in I.TA. No. 470 of 2005
WITH
C.A. No. 4522, 4523, 4524, 4525, 4526, 4527, 4528,
D 4529, 4530 and 4537 of 2008 -~

Dr. R.G. Padia, Alka Sharma, Sanjeev Bhardwaj, Deb
Kumar and B.V. Balaram Das for the Appellant.
R.S. Suri, Mahua C. Kalra and Jagiit Singh Chhabra for
the Respondent.
E
The Judgment of the Court was delivered ·by
Dr. ARIJIT PASAYAT, J 1. Leave granted.
2. In all these a·ppeals, identical questions are involved.
F The assessee in each case is an insurance company and is
covered by the lnsuranceAct, 1983 (in short the 'Insurance Act'). "
According to the appellant every insurance company has to be
assessed under Section 44 of the Income Tax Act, 1961 (in short
the 'Act') as per Rule 5 of the First Schedule. An assessment )'r

G was made in each case and the same was upheld by the Com-
missioner of Income Tax (Appeals). The Income. Tax P. ppellate
Tribunal (in short the 'Tribunal') deleted the addition made. The
Tribunal accepted the stand of the respondent-insurance com-
"
pany. Certain other connected cases were also dealt with. In all
these appeals the question is whether the Department would
H
COMMISSIONER OF INCOME TAX, DELHI-VI v. M/S 1157
ORIENTAL INSURANCE CO. LTD. [DR. ARIJIT PASAYAT, J]

prefer appeals and/or file petitions without obtaining clearance A
from the Committee of Disputes (in short 'COD') constituted in
terms of order of this Court. According to the High Court it was
necessary to refer the matter to the said Committee. The High
Court held that the same was to be done within a period of one
month in terms of the order of this Court in Oil and Natural Gas 13
Commission v. Collector of Central Excise (2004 (6) SCC 437).
Accordingly the appeals were dismissed.
3. The High Court held that since this Court had set the
time frame there is no scope for any deviation therefrom.
c
4. Learned counsel for the appellant submitted that there
is really no statutory and/or rigidly framed time limit. This Court
only highlighted the desirability of early action so that unneces-
sary litigation can be avoided.
5. Learned counsel for the respondent submitted that in D
some cases the concerned Committee has also declined to
grant permission and those appeals have become infructuous.
In Oil and Natural Gas Commission's case (supra). this Court
observed as follows:
"5. It is also clarified that even the pending matters before E
any court or tribunal should also be the subject-matter of the
deliberations of the High-Powered Committee. All the matters
pending as of today either instituted by the Union of India or
any of the public sector undertakings shall within one month
from today be referred by the appellant or the petitioner, as F·
the case may be, to the High-Powered Committee. The High-
Powered Committee will deal with these matters most
expeditiously and endeavour to resolve the matters.
6. Accordingly, there should be no bar to the lodgement of G
an appeal or petition either by the Union of India or the
public sector undertakings before any court or tribunal so
as to save limitation. But, before such filing every
endeavour should be made to have the clearance of the
High-Powered Committee.
H
1158 SUPREME COURT REPORTS [2008] 10 S.C.R.
.
A 7. However, as to what the court or tribunal should do if
such judicial remedies are sought before such a court or ~
tribunal, the order of 11-10-19911 clarifies: (SCC p.
542, para 4)
""t'
"4. It shall be the obligation of every court and every
B tribunal where such a dispute is raised hereafter to
I
r-
demand a clearance from the Committee in case it has
not been so pleaded and in the absence of the clearance,
the proceedings would not be proceeded with."

c 8. Wherever appeals, petitions, etc. are filed without the
clearance of the High-Powered Committee so as to save
limitation, the appellant or the petitioner, as the case may be,
shall within a month from such filing, refer the matter to the
High-Powered Committee, with prior notice to the designated
authority in th.e Cabinet Secretariat of the Government of ,\
D India authorised to receive notices in that behalf. Shri K.T.S.
Tulsi, leamedAdditional Solicitor General stated that in order
to coordinate these references of the High-Powered
Committee the Government proposes to nominate the Under-
Secretary (Coordination) in the Cabinet Secretariat as the
E nodal authority to coordinate these references. The reference
shall be deemed to have been made and become effective
only after a notice of the reference is lodged with the said
nodal authority. The reference shall be deemed to be valid if
made in the case of the Union of India by its Secretary, Ministry
of Finance, Department of Revenue, and in the case of public \
F
sector undertakings by its Chairman, Managing Director or
Chief Executive, as the case may be. It is only after such
reference to the High-Powered Committee is made in the
manner indicated that the operation of the order or
proceedings under challenge shall be suspended till the High-
G
Powered Committee resolves the dispute or gives clearance
to the litigation. If the High-Powered Committee is unable to
resolve the matter for reasons to be recorded by it, it shall
grant clearance for the litigation."

H (underlined for emphasis)
COMMISSIONER OF INCOME TAX, DELHI-VI v. M/S 1159
ORIENTAL INSURANCE CO. LTD. [DR. ARIJIT PASAYAT, J]

6. Referring to the order passed by this Court on A
11.10.1991 i.e. Oil and Natural Gas Commission and Anr. V
Collector of Central Excise (1995 Supp (4) SCC 541), this
Court held that in the matter of setting up of the function of the
High Powered Committee for resolving disputes between Union
of India on one hand and Public Undertaking on the other re- B
..quired some clarification as some misconception arose.
7. In ONGC Case No. I i.e. (1995 Supp (4) SCC 541) in
para 3 it was noted as follows:
"We direct that the Government of India shall set up a G
Committee consisting of representatives from the Ministry
of Industry, the Bureau of Public EAterprises and the
Ministry of Law, to monitor disputes between Ministry and
Ministry of Government of India, Ministry and public sector
undertakings of the Government of India and public sector
.. undertakings in between themselves, to ensure that no
0
litigation comes to Court or to a Tribunal without the matter
having been first examined by the Committee and its
clearance for litigation. Government may include a
representative of the Ministry concerned in a specific case
and one from the Ministry of Finance in the Committee. E
Senior officers only should be nominated so that the
Committee would function with status, control and discipline.
8. In para 4 it was further observed as follows:
"It shall be the obligation of every Court and every Tribunal F
where such a dispute is raised hereafter to demand a
clearance from the Committee in case it has not been so
pleaded and in the absence of the clearance, the
proceedings would not be proceeded with."
9. Subsequently, the disputes involving the State Govern-
G
ments and the Public Sector Undertakings have been consid-
ered by this Court and one such matter was dealt with in Oil and
Natural Gas Corporation Ltd. V City & Industrial Development
Corporation, Maharashtra Ltd. And Ors. (2007 (7) SCC 39).
H
1160 SUPREME COURT REPORTS [2008] 10 S.C.R.
r
A 10. It needs to be emphasized that there was actually no
rigid time frame indicated by this Court. The emphasis on one
month's time was to show urgency needed. Merely because
there is some delay in approaching the Committee that doe.s
not make the action illegal. The Committee is required to deal
B with the matter expeditiously so that there is no unnecessary
backlog of appeals which ultimately may not be pursued. In that
sense, it is imperative that the concerned authorities take ur-
gent action otherwise the intended objective would be frustrated.
There is no scope for lethargy. It is to be tested by the Court as
c to whether there was any indifference and lethargy and in ap-
propriate cases refuse to interfere. In these cases factual posi-
tion is not that. Therefore, we set aside the order .of the High
Court in each case and direct consideration of the question of
desirability to proceed in the matter before it on receipt of the
report from the concerned Committee.
D
-~
11. Learned counsel for the appellant submitted that even
if the Committee has declined to grant permission it i:S still open
to raise the issues in appropriate proceedings. We express no
opinion in that regard. But where the Committee has declined
E to deal with the matter on the ground of b~lated approach, the
same cannot be sustained in view of our present order. The
Committee has to consider the matter on merits.
12. It is to be noted that where permission has been
granted by the Committee there is no impediment on ~he Court
F to examine the matter and take a decision on merits. But where
there is no belated approach as noted above, the matter has to
be decided. Court has to decide whether because of unex-
plained delay and lethargic action it would decline to entertain
the matters. That would depend on the factual scenario in each
G case, and no straight jacket formula can be adopted.
13_. The appeals are accordingly allowed to the aforesaid ,...,
extent. There will be no order as to costs.

H
N.J .. Appeals partly allowed. -
~