JUDGMENT RAVI S. DHAVAN, J. - The Pradeshiya Industrial and Investment Corporation, U.P., Ltd., Lucknow has filed the present petition seeking reliefs against the State of Uttar Pradesh through the Secretary, Finance Department, Government of U.P., Lucknow, the Commissioner, Kumaom Division, Nainital and the Deputy Collector (Collection), Sales Tax, Haldwani, District Nainital. The respondent No. 4, Messrs L.H. Sugar Factory Ltd., Tahsil Kashipur, District Nainital, is in effect a pro forma respondent. This Court has heard learned counsel for the petitioner and learned Standing Counsel at length. The short facts are that the Pradeshiya Industrial and Investment Corporation, U.P. Ltd., Lucknow (hereinafter referred to as "the Corporation") had granted a loan to one Messrs. Fine Straw & Card Board Factory Pvt., Limited under an arrangement of joint equitable mortgage along with the U.P. State Financial Corporation Limited. The loans, the petitioner submits amounted to Rs. 17 lacs, Rs. 18.30 lacs and Rs. 30 lacs. The loans were not paid by the aforesaid Fine Straw & Card Board Factory Pvt., Limited and, thus, the corporation, aforesaid, exercised its rights under section 29 of the State Financial Corporations Act, 1951 and took possession of the assets of the debtor (Fine Straw & Card Board Factory Pvt. Limited) and transferred it by a sale to Messrs L.H. Sugar Factories Pvt., Limited, Pilibhit, by two agreements dated November 29, 1990 and May 9, 1991. The transfer to L.H. Sugar Factories Pvt., Limited was by sale. This modality gave advantage to the corporation to redeem part of its loan. This is one aspect of the matter. In the meantime, it appears that against Fine Straw & Card Board Factory Pvt. Limited, a demand from the Sales Tax Department stood unsatisfied, consequently this department took out recovery proceedings to secure sales tax amounting to Rs. 5,63,800. The recovery proceedings has reached a stage by which the assets of the subsequent transferee L.H. Sugar Factories Pvt. Limited, Pilibhit, are now being attached. The court is informed that the auction has taken place. The sale has yet to be confirmed. 5,63,800. The recovery proceedings has reached a stage by which the assets of the subsequent transferee L.H. Sugar Factories Pvt. Limited, Pilibhit, are now being attached. The court is informed that the auction has taken place. The sale has yet to be confirmed. The contention of learned counsel for the corporation is that the loan which was given to Fine Straw & Card Board Factory Pvt. Limited after adjusting the amount by sale of the assets to L.H. Sugar Factories Pvt. Limited has not been discharged in its entirety and to redeem moneys under the loan which remained outstanding as a debt, the corporation will invoke the indemnity or guarantee clauses as the case may be. This is the other aspect of the matter. It is contended by the corporation that after it sold the property to L.H. Sugar Factories Pvt. Limited, the assets are subject to a separate mortgage in favour of the corporation. The corporation has reservations whether the Sales Tax Department can subject this mortgaged property to an attachment for alienation to a third party for recovery of sales tax dues. It is emphasised on behalf of the corporation that any arrangement which it has made by transferring the assets, in context, to L.H. Sugar Factories Pvt. Limited, it has done so in accordance with the rights available to it by law under the State Financial Corporations Act, 1951. It is submitted that the right which has been conferred upon it by law cannot be taken away by a department of the State Government as it would virtually amount to a Hs between State and State. The court's attention has been drawn to an objection/representation which the corporation gave, dated May 22, 1993, to the Deputy Collector (Collection), Sales Tax, Haldwani submitting that the Sales Tax Department, the Corporation or the U.P. Financial Corporation, are all instrumentalities of the Government of Uttar Pradesh and that the present action of the Sales Tax Department to attach and sell by auction and the inevitable consequence that the property will pass to a third party, would lead to unnecessary litigation amongst two agencies of the State Government. It was suggested by the corporation that the matter be referred to the Legal Department of the State Government for perusal and solution through their respective secretaries. It was suggested by the corporation that the matter be referred to the Legal Department of the State Government for perusal and solution through their respective secretaries. It was further suggested that until the matter has been examined between the secretaries concerned, the proposed attachment or auction, as the case may be, ought not to be acted upon. It was further suggested by the corporation that the company, Messrs. Fine Straw & Card Board Factory Pvt. Limited continues to exist and the Sales Tax Department may realise its dues from the director's of the company from their personal assets. The representation of the corporation dated May 22, 1993 is appended as annexure "6" to the petition. It is submitted that this objection or representation of the corporation was summarily rejected by the Deputy Collector (Collection), Sales Tax, Haldwani on May 24, 1993. Finding that the assets sold by the corporation, which it could do under section 29, has been subjected to an attachment for auction with only the confirmation of sale remaining, it was left with no other alternative but to file the present petition with no other status except that it was a company, though a Government company, registered under the Companies Act, 1956 as this alone gave it the status of a person to move the High Court in its extraordinary jurisdiction under article 226 of the Constitution of India. At the very outset, without going any further into the nature of the controversy between a department of the Government and a Government company, the court has drawn attention of the parties present at the Bar to a recent decision of the Supreme Court discouraging issues between departments of the Government or for that matter between the Government and public sector undertakings. The judgment of the Supreme Court is short and, thus, it is reproduced as below : "M/s. Oil and Natural Gas Commission v. Collector of Central Excise. I.A. Nos. 1 and 2 in Civil Appeal Nos. 2058-2059 of 1988. Ranganath Misra, C.J.I., P. B. Sawant and S. Mohan, JJ. October 11, 1991. ORDER We are happy to find that the Cabinet Secretary has taken the appropriate initiative as indicated in our order dated September 11, 1991 and has reported to us that the dispute between the Government department and the public sector undertaking of the Union of India has been settled. October 11, 1991. ORDER We are happy to find that the Cabinet Secretary has taken the appropriate initiative as indicated in our order dated September 11, 1991 and has reported to us that the dispute between the Government department and the public sector undertaking of the Union of India has been settled. In that view of the matter no further action is necessary on the petition. In his report the Cabinet Secretary has stated : 'I would also like to state that the Government respects the view expressed by this honourable Court and has accepted them that public undertakings of Central Government and the Union of India should not fight their litigation in court by spending money on fees on counsel, court fees, procedural expenses and wasting public time. It is in this context that the Cabinet Secretariat has issued instructions from time to time to all departments of the Government of India as well as to public undertakings of the Central Government to the effect that all disputes, regardless of the type, should be resolved amicably by mutual consultation or through the good offices of empowered agencies of the Government or through arbitration and recourse to litigation should be eliminated'. We direct that the Government of India shall set up a committee consisting 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 undertaking 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 discipline. 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. The committee shall function under the ultimate control of the Cabinet Secretary but his delegate may look after the matters. The committee shall function under the ultimate control of the Cabinet Secretary but his delegate may look after the matters. This Court would expect a quarterly report about the functioning of this system to be furnished to the Registry beginning from January 1, 1992. Our direction may be communicated to every High Court for information of all the courts subordinate to them." [JT 1991 (4) SC 158] From the decision of the Supreme Court, aforesaid, it is clear that there is an obligation on the court or a Tribunal to discourage conflicts between departments of the Government or between a department of the Government or a public sector undertaking. Far from finding a solution to the problem, the representation of the corporation pleading that a solution be found out was rejected cryptically on May 24, 1993. According to the decision of the Supreme Court, there is also an obligation on the High Court to first demand from the State Government an answer, to the effect, that no litigations are to come to court without first having been examined by a committee clearing it for a litigation whether before the Collector, the Sales Tax Department or before the High Court. There is also a Government Order of the State Government, No. 160/Sat Nyaya-4-9/91 dated January 16, 1991 which obliges the departments of the State Government to first sort out issues between them before entering the arena of courts. This Court cannot permit issues between departments of the Government, Government companies or for that matter public sector undertakings to enter into litigation amongst them, without first having made attempts to resolve disputes, if they exist. In the present case the court is of the opinion that if the sale by public auction was to be confirmed it is clear that the assets on which the corporation has given loan will pass to a third party and far from resolving issues would bring in an extraneous factor and complicate a litigation. That the Sales Tax Department may solve its headache still leaves a problem in issues. The mortgage which has been taken out in favour of the corporation would be frustrated. The loan was given against public moneys. The purpose is to encourage industries. The Sales Tax Department cannot be oblivious to this fact. That the Sales Tax Department may solve its headache still leaves a problem in issues. The mortgage which has been taken out in favour of the corporation would be frustrated. The loan was given against public moneys. The purpose is to encourage industries. The Sales Tax Department cannot be oblivious to this fact. The solution to the problem should be that the Sales Tax Department should also be in a position to realise its arrears and the mortgage in favour of the corporation should not be frustrated or jeopardised. The State of Uttar Pradesh is under an obligation to notice the decision of the Supreme Court in Oil and Natural Gas Commission JT 1991 (4) SC 158. The Secretaries to the Government, in this case, the Secretary, Finance and Secretary, Industries are obliged to meet at a conference and sort out the matter as to how the sales tax dues are to be realised without frustrating or weakening the mortgage so that a situation may not arise that the corporation suffers a loss on another loan and occasioning loss of public moneys. Thus, the representation or the objection made by the Pradeshiya Industrial and Investment Corporation, U.P. Limited, dated May 22, 1993 rejected by the Deputy Collector (Collection), Sales Tax, Haldwani alone should become the basis of the meeting of the secretaries for finding out a solution, which under the decision of the Supreme Court is their obligation. Until a decision is taken by the State of Uttar Pradesh without permitting litigation between the corporation and the Sales Tax Department, the confirmation of the auction, dated July 5, 1993 in pursuance of the recovery proceedings in the matter of sales tax dues against Fine Straw & Card. Board Factory Pvt. Limited and in the matter of an attachment relating to Khata Khatauni No. 166, Khet No. 1392/Ka-Se/87/2, Rakba 4.00 Ka 1/2 bhag (wali bhumi), Lagan 40.00 shall remain stayed. With the aforesaid observations and directions, this petition is laid to rest.