Income Tax, Delhi-Vi Vs. M/S Oriental Insurance Co. Ltd.  INSC 1174 (18
JURISDICTION CIVIL APPEAL NO. 4521 OF 2008 (Arising out of SLP (CIVIL) NO.
14051 of 2006) Commissioner of Income Tax, Delhi-VI ....Appellant Versus M/s
Oriental Insurance Co. Ltd. ....Respondent WITH
(Civil Appeal No.4529 /2008 @ SLP ( C ) No.11969/2007) (Civil Appeal No.
4524/2008 @ SLP ( C ) No.14039/2007) (Civil Appeal No. 4528/2008 @ SLP ( C )
No.14045/2007) (Civil Appeal No. 4530/2008 @ SLP ( C ) No.14052/2007) (Civil
Appeal No. 4525/2008 @ SLP ( C ) No.14636/2007) (Civil Appeal No.4522/2008 @
SLP ( C ) No.15522/2006) (Civil Appeal No. 4526/2008 @ SLP ( C ) No.16286/2007)
(Civil Appeal No. 4523/2008 @ SLP ( C ) No. 16982/2006 (Civil Appeal No.
4527/2008 @ SLP ( C ) No. 19728/2007) (Civil Appeal No.4537/2008 @ SLP (C ) No.
Dr. ARIJIT PASAYAT, J
all these appeals, identical questions are involved. The assessee in each case
is an insurance company and is covered by the Insurance Act, 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 was made in each case and the
same was upheld by the Commissioner of Income Tax (Appeals). The Income Tax
Appellate Tribunal (in short the `Tribunal') deleted the addition made. The
Tribunal accepted the stand of the respondent- insurance company. Certain other
connected cases were also dealt with. In all these appeals the question is
whether the Department would prefer appeals and/or file petitions without
obtaining clearance 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 Commission v. Collector of Central Excise (2004 (6) SCC
437). Accordingly the appeals were dismissed.
High Court held that since this Court had set the time frame there is no scope
for any deviation there from.
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 unnecessary litigation can be avoided.
counsel for the respondent submitted that in some cases the concerned Committee
has also declined to grant permission and those appeals have become
In Oil and Natural
Gas Commission's case (supra) this Court observed as follows:
"It is also
clarified that even the pending matters before 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 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.
there should be no bar to the lodgement of 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.
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) "4. It shall be the obligation of every court and every
tribunal 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."
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 the
Cabinet Secretariat of the Government of India authorised to receive notices in
Shri K.T.S. Tulsi,
learned Additional Solicitor 4 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 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 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-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." (underlined for emphasis)
6. Referring to the
order passed by this Court on 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 required some clarification as some misconception
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 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 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 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. Senior officers only should be
nominated so that the Committee would function with status, control and
8. In para 4 it was
further observed as follows:
"It shall be the
obligation of every Court and every Tribunal 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
the disputes involving the State Governments and the Public Sector Undertakings
have been considered 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).
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 does not make the
action illegal. The Committee is required to deal 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
urgent action otherwise the intended objective would be frustrated. There is no
scope for lethargy. It is to be tested by the Court as to whether there was any
indifference and lethargy and in appropriate cases refuse to interfere. In
these cases factual position 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.
counsel for the appellant submitted that even if the Committee has declined to
grant permission it is still open to raise the issues in appropriate
proceedings. We express no opinion in that regard. 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 our present order. The Committee has to consider
the matter on merits.
is to be noted that where permission has been granted by the Committee there is
no impediment on the Court 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 unexplained delay 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.
appeals are accordingly allowed to the aforesaid extent. There will be no order
as to costs.
ARIJIT PASAYAT) ..................................J.