Holding

The Supreme Court held that the writ petition is not maintainable and the dispute must be referred to a committee of senior officials to resolve inter‑governmental differences.

Summary

Oil & Natural Gas Corporation Ltd., a central government entity, filed a writ petition under Article 226 against the City and Industrial Development Corporation of Maharashtra (CIDCO), a state entity, seeking execution of a lease agreement for possession of land plots. The Bombay High Court dismissed the petition, holding that contractual disputes are not suitable for writ jurisdiction and should be pursued through a civil suit. ONGC appealed to the Supreme Court, arguing that the dispute involved two public bodies and should be maintainable. The Supreme Court held that such inter‑governmental disputes should not be litigated in courts but referred to a high‑powered committee, as endorsed by earlier judgments. Accordingly, the Court directed the formation of a committee comprising the Union Cabinet Secretary, the State Chief Secretary, relevant secretaries and CEOs to resolve the matter within four months. The appeal was disposed of without any order as to costs.

Issues considered

The maintainability of a writ petition under Article 226 in a dispute between a central government entity and a state government entity concerning contractual matters.
Whether the dispute should be resolved through a high‑powered committee rather than judicial intervention.

Legislation cited

Constitution of Indias. Article 13, s. Article 131, s. Article 226

Subjects

writ jurisdictionArticle 226intergovernmental disputecentral vs state entitycontract enforcementcommitteepublic sector undertakingsmaintainabilitycivil suit alternative

Judgment

OIL & NATURAL GAS CORPORATION LTD. A
v.
CITY & INDUST. DEV. CORPN., MAHARASHTRA AND ORS.

JULY 20, 2007

[DR.ARIJITPASAYAT ANDLOKESHWARSINGHPANTA,JJ.] .B

Constitution of India, 1950:

Article 226 read with Article 13 I-Dispute betwee~ a Central
Government entity and a State Government entity-Writ petition- ·C
Maintainablity of-Held: Considering the nature of contrqversy and in view
of the decisions of the Supreme Court, a Committee of the Officers mentioned
in- the judgment be formed to sort out the dispute between the Central
Government and the State Government expeditiously-Directions issued.

The appellant-Corporation, a Government of India entity filed a writ
D
petition against the respondent City and Industrial Development Corporation,
a State Government entity, inter alia, for a direction to execute the agreement
in respect of possession of the plots covered thereunder. The High Court
ultimately hetd that the issues related to contractual matters and the writ
petition was not the appropriate remedy. Aggrieved, the writ petitioner filed E
the instant appeal.

Disposing of the appeal, the Court

HELD: In the instant case, CIDCO is a State entity and the appellant is
a central entity. The desirability of having a committee to sort out differences F
between public sector undertakings, State Governments and different
Government departments has been highlighted by this Court in several cases.
The matter is pending since 1990. Considering the nature of the controversy,
which is a recurring feature, it is directed that a committee comprising the
officers mentioned in the judgment be formed to sort out the differences
between the Central Government and the State Government entities Q
expeditiously. (Paras 7, 10 and 11) 1431-H; 432-A; 436-8-D]

Chief Conservator of Forests, Govt. ofA.P. v. Collector and Ors., 12003)
2 SCR 180=(2003) 3 SCC 472; Punjab and Sind Bank v. Allahabad Bank
429 II
430 SUPREME COURT REPORTS (2007) 8 S.C.R.

A and Ors., (2006) 3 SCR 489=2006 4 SCC 780; U.P. SEB and Anr. v. Sant
Kabir Sahakari K'(ltai Mills Ltd. (2005) 3 Supp. SCR 293=[2005) 7 SCC 576;
and Mahanagar Telephone Nigam Ltd v. Chairman, Central Board, Direct
Taxes and Anr., (2004) 2 Supp. SCR 593=(2004) 6 SCC 431, relied on.

Mis Popcorn Entertainment & Anr. v; City Industrial Development
B Corpn & Anr., JT (2007) 4 SC 70; National Highways Authority of India v.
Ganga Enterprises and Anr., (2003) 3 Supp. SCR 114=(2003) 7 SCC 410 and
Rajureshwar Associates v~ State of Maharashtra, (20041 2 Supp. SCR
915=(200416SCC362; Whirlpool Corporation v. Registrar of Trade Marks,
Mumbai and Ors., (19981 2 Supp. SCR 359=(19981 8 SCC 1 and Oil and
C Natural Gas Commission and Anr. v. Collector of Central Excise, (19921 Supp
2 sec 432, cited.

CIVIL APPELLATE JURISDICTION:, Civil Appeal No; 3143 of2007.

From the Judgment & Order datea 18. 7 .2004 of the High Court of
D Judicature at Boinbay in Civil Writ Petition No. 4036 of 200 I.
.. .

Gourab Banerjee, Sunil Kumar Jain, S. Borth~kur and Jaya Tomar for the
Appellant.

Altaf Ahmad, Varun 'rhiikur and A.S. Bhasme for the Respondents.
E The Judgment of the Court was delivered by

DR. ARIJIT PASAYAT, J. I. Leave granted .

. 2. Challenge in. this appeal is to the order passed by a Division Bench
of the Bombay High Court dismissing the Civil Writ Petition No.4036 of2001
F ~ith Civil Application No.1583 of2004: It was held that with reference to
several judgments of this Court the writ jurisdiction should not be exercised
in contractual matters. It was also held that there was no reason whatsoever
for which. a Government of India und~rtaking shall bypass the alternative
remedy of a .civil suit.
G
· 3·. Background facts in a nutshell are as follows:

A writ petition was filed l;>y the appellant alleging inaction on the part
of the City & Industrial Development Corporation of Maharashtra Limited
(hereinafter referred to as 'CIDCO') in not executing the agreement of lease
H

/
OIL& NATURALGASCORPN. LTD. v. CITY & INDUST. DEV. CORPN., MAHARASHTRA(PASAYAT,J.) 43)

with the appellant-company. Prayer in the writ petition was for a direction by A '
issuance of an appropriate writ requiring the CIDCO to execute the agreement
in respect of the possession of plots covered by the agreements. Prayer
essentially w~s (i) to hand over the possession of plot of land admeasuring
24 hectares ·demarcated in favour of the appellant situated at Bhandkhal
(Navghar), Taluka Uran alongwith approach road and water supply till the
boundary of the said plot of land; (ii) execute a lease agreement for the period B
set out more particularly in the letter of allotment dated 5th March, 1984 in
respect of the said plot of land; (iii) issue appropriate writ in respect of
demand for service charge contained in the letter dated 24th July, 1990 and
(iv) other reliefs.

4. The High Court referred to several correspondence exchanged between
c
the parties but ultimately held that the issues related to contractual matters
and the writ petition was not the appropriate remedy. Findings were also

... recorded regarding maintainability of the writ petition .

5. In support of the appeal, learned counsel for the appellant submitted D ,
that the High Court has lost sight of the fact that the dispute involved two
public bodies. It was highlighted by learned counsel for the appellantthat this
Court in Mis Popcorn Entertainment & Anr. v. City Industrial Development
Corpn. & Anr., JT (2007) 4 SC 70 held in para 15 about the maintainability
of the writ petition. In paragraph 42 of thejudgment it was noted that there
was no dispute and in fact there was concession regarding maintainability of E
the writ petition. Reference has also been made to National Highways Authority
of India v. Ganga Enterprises and Anr., [2003] 7 SCC 410 and Rajureshwar
Associates v. State of Maharashtra, [2004] 6 SCC 362 to contend that in all
contractual matters a writ application can be entertained. The three
circumstances wherein relating to contractual matters writ applications can be F
·...,{_
entertained were set out in Whirlpool Corporation v. Registrar of Trade
Marks, Mumbai and Ors., [1998] 8 sec I.

6. Mr. Altaf Ahmad, learned senior counsel on the other hand submitted
that in a dispute of this nature, the course indicated by this Court in Oil and
Natural Gas Commission and Anr. v. Collector of Central Excise, [1992] G.
Supp 2 sec 432 can be applied.

7. In the instant case, CIDCO is a State entity and the appellant is a
central entity. The desirability of having a committee to sort out differences
between pubic sector undertakings, State Governments, different Govt.
H
432 SUPREME COURT REPORTS [2007) 8 S.C.R.

A departments have been highlighted by this Court in several cases. In Chief
Conservator of Forests, Govt. ofA.P. v. Collector and Ors., [2003] 3 SCC 472 ~
it was inier alia as follows:

"I 4. Under the scheme of the Constitution, Article 131 confers original
jurisdiction on the Supreme Court in regard to a dispute between two
B States of the Union of India or between one or· more States and the
Union of India. It was not contemplated by. the framers of the
Constitution or CPC that two departments of a State or the Union of
India will fight a litigation in a court of law. It is neither appropriate
nor perm,issible for two departments of a State or the Union of India

c to fight litigation in a court of law. Indeed, such a course cannot but
be detrimental to the public interest as it also entails avoidable wastage
of public money and time. Various departments of the Government are
its limbs and, therefore, they must act in coordination and not in
confrontation. Filing of a writ petition by one department against the
other by invoking the extraordinary jurisdiction of the High Court is
D not only against the propriety and polity as it smacks of indiscipline
but is also contrary to the basic concept of law which requires that
for suing or being sued, there must be either a natural or a juristic
person. The States/Union of India rriust evolve a mechanism to set at
rest all interdepartmental controversies at the level of the Government
• and such matters should not be carried to a court of law for resolution
E of the controversy. In the case of disputes between public sector
undertakings and the Union of India, this Court in Oil and Natural
Gas CommissiC'n v. CCE, [1992] Supp 2 SCC 432 called upon the
Cabinet Secretary to handle such matters. In Oil and Natural Gas
Commission v, CCE, [1992] Supp 4 SCC 541 this Court directed the
F Central Government to set up a committee consisting of representatives
from the Ministry of 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
G without the matter having been first examined by the 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
H status, control and discipline.
OIL&NATURALGASCORPK LID. v. CITY &INDUST. DEV.CORPN.,MAHARASHTRA(PASAYAT,J.) 433 ·

15. The facts of this appeal, noticed above, make out a strong case A
that there is a felt need of setting up of similar committees by the State
Government also to resolve the controversy arising between various
departments of the State or the State and any of its undertakings. It
would be appropriate for the State Governments to set up a committee
consisting of the Chief Secretary of the State, the Secretaries of the B
departments concerned, the Secretary of Law and where financial
commitments are involved, the Secretary of Finance. The decision
taken by such a committee shall be binding on all the departments
concerned and shall be the stand of the Government."

8. In Punjab and Sind Bank v. Allahabad Bank and Ors.. [2006] 4 SCC C
780 it was observed as follows:

"6. The matter was again examined in the case of Chief Conservator
of Forest v. Collector, [2003] 3 SCC 472. In Para 14 and 15. it was noted
as follows:
"Under the scheme of the Constitution, Article 131 confers original D
.. ,.._ jurisdiction on the Supreme Court in regard to a dispute between ·-
two States of the Union of India or between one or more States
and the Union of India. It was not contemplated by the framers
of the Constitution or the C.P.C. that two departments of a State
or the Union of India will fight a litigation in a court of law. It is E
neither appropriate nor permissible for two departments of a State
or the Union of India to fight litigation in a court of law. Indeed,
such a course cannot but be detrimental to the public interest as
it also entails avoidable wastage of public money and time. Various
departments of the Government are its limbs and, therefore, they
must act in co-ordination and not in confrontation. Filing of a writ F
. 7'
petition by one department against the other by invoking the
extraordinary jurisdiction of the High Court is not only against
the propriety and polity as it smacks of indiscipline but is also
contrary to the basic concept of law which requires that for suing
or being sued, there must be either a natural or a juristic person.
G
The States/Union of India must evolve a mechanism to set at rest
all inter-departmental controversies at the level of the Government
and such matters should not be carried to a court of law for
--1 resolution of the controversy. In the case of disputes between
public sector undertakings and Union of India, this Court in Oil
and Natural Gas Commission v. Collector of Central Excise, H
434 SUPREME COURT REPORTS (2007) 8 S.C.R.

A (1992) Suppl. 2 SCC 432 called upon the Cabinet Secretary to
handle such matters. In Oil and Natural Gas Commission & Anr.
V. Collector of Central Excise, (1995) Suppl. 4 sec 541, this
Court directed the Central Government to set up a Committee
consisting of representatives from the Ministry of Indµstry, the
Bureau of Public Enterprises and the Ministry of Law, to monitor
B dispute 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 Committee
c and its clearance for litigation. The Government may include a
a
representative of the Ministry concerned in 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.

·n The facts of this appeal, noticed above, make out a strong case
that there is felt need of setting up of simifar committees by the
State Government also to resolve .the controversy arising between
various departments of the State or the State and any of its
undertakings. It would be appropriate for the State Governments
to set up a Committee consisting of the Chief Secretary of the
E State, the Secretaries of the concerned departments, the Secretary
of Law and where financial commitments are involved, the
Secretary of Finance. The decision taken by such a committee
shall be binding on all the departments concerned and shall be
the stand of the Government. "

F 7. The directions as noted above were quoted in Mahanagar Telephone
Nigam Ltd v. Chairman, Central Board, Direct Taxes and Anr.,
[2004) 6 SCC 431 and were adopted in paragraph 8. It was noted as
follows:

"Undoubtedly, the right to enforce a right in a court of law cannot
G be effaced. However, it must be remembered that courts are
overburdened with a large· number of cases. The majority of such
cases pertain to Government Departments and/or public sector
. undertakings. As is stated in Chief Conservator of Forests' case
(2-003) 3 sec 472 it was not contemplated by the framers of the
H Constitution or the Civil Procedure Code that two departments of a
OIL A NATURAL OAS CORPN. LTD. v, CITY 11 INDUST. DEV CORPN., MAHARASHTRA [PASAYAT, I ] 43 S
~ State or Union of India and/or a department of the Oovemment and .A
a public sector undertaking tight a litigation in a court of law. Such
a course is detrimental to public interest as it entails avoidable wastage
of public money and time. These are all limbs of the Oovemment and
must act in co-ordination and not confrontation. The mechanism set
up by this court is not, as suggested by Mr. Andhyarujina, only to
conciliate between Government Departments. It is also set up for B.
... purposes of ensuring that frivolous disputes. do not come before
courts without clearance from the High Powered Committee. If it can,
" the High Powered Committee will resolve the dispute. If the dispute
is not resolved the Committee would undoubtedly give clearance.
However, there could also be frivolous litigation proposed by a c
department of the Government or a public sector undertaking. Th\s
could be prevented by the High Powered Committee. In such cases
there is no question of resolving the dispute. The Committee only has
to refuse permission to litigate. No right of the Department/public
sector undertaking is affected in such a case. The litlgatiotl being of
,;
a frivolous nature must not be brought to court. To be remembered D
~
that in almost all cases one or the other party will not be happy with
the decision of the High Powered Committee. The dissatisfied party
will always claim that its rights are affected, when in fact, no right is
affected. The Committee is constituted of highly placed officers of the
Government, who do not have an interest in the dispute, it is thus E
expec.ted that their decision will be fair and honest. Even if the
Department/public sector undertaking finds the decision unpalatable,
discipline requires that they abide by it. Otherwise the whole purpose
of this exercise will be lost and every party against whom the decision
is given will claim that they have been wronged and that their rights
.... are affected. This should not be allowed to be done." F
· 8. The ONGC I to Ill cases (supra), Chia/Conservator's case (supra)
and Mahanagar Telephone's case (supra) deal with disputes relating
to Central Government, State Government and Public Sector
Undertakings. They have no application to the facts of these cases
as the High Court has not indicated any reason for its abrupt conclusion G
that the writ petitioners are Public Sector Undertakings. In the absence
of a factual determination in that regard, the decisions can have no
--!
applh~ation."

9. The position has also been examined in U.P. SEB and Anr. v. Sant
H

,_

,\
436 SUPREME COURT REPORTS (2007) 8 S.C.R ..

A Kabir Sahakari Katai Mills ltd, [2005) 7 SCC 576 and Mahanagar Telephone
Nigam 's case (supra).

10. The matter is pending since 1990. Considering the nature of the
controversy which is a recurring feature we direct that a committee be formed
to sort out the differences between the Central Government and the State
B Government entities. The composition of such committee shall be as follows:
(I) The Cabinet Secretary of the Union;
(2) Chief Secretary of the State;
(3) Secretaries of the concerned departments of Union and the State;
c and
(4) Chief Executive Officers of the concerned undertakings.

I I. As the matter is pending since Jong, we direct that the Committee
shall be constituted forthwith to take a decision within 4 months from the date
D of receipt of copy of this judgment.
12. The appeal is disposed of with no order as to costs.

R.P. Appeal disposed of.