SC doubts law requiring PSUs to obtain COD approval

In ONGC vs. CCE 104 CTR (SC) 31, the Supreme Court directed the Central Government to set up a `Committee on Disputes’ to monitor disputes between the Government and Public Sector Enterprises and give clearance for litigation. It was held the no litigation could be proceeded with in the absence of COD approval. This was followed in ONGC vs. CIDCO (2007) 7 SCC 39 and it was held that even disputes between PSUs and State Governments would require COD approval. HELD doubting the correctness of this law and referring the matter to a larger bench for reconsideration:

“In our experience, the working of the COD has failed. Numerous difficulties are experienced by the COD which are expressed in the letter of the Cabinet Secretary, dated 9th March, 2010. Apart from the said letter, we find in numerous matters concerning public sector companies that different views are expressed by COD which results not only in delay in filing of matters but also results into further litigation.

In the circumstances, we find merit in the submission advanced before us by learned Attorney General that time has come to revisit the orders passed by the three Judge Bench of this Court in the case of Oil & Natural Gas Commission vs. Collector of Central Excise (supra)”.

Note: In Shivshahi Punarvasan Prakalp vs. UOI (Bombay High Court) it was held that state govt undertakings do not require COD approval for income-tax matters. See Also: Gujarat Mineral Development Corp vs. ITAT 25 DTR 241 (Guj)