The Supreme Court has appointed two mediators to resolve a dispute raised by Punjab against the Centre, Jammu & Kashmir, Himachal Pradesh and Uttarakhand.

A Bench of Justices Markandey Katju and Gyan Sudha Misra in its order said: “We are of the opinion that an effort should be made to resolve the dispute between the parties through mediation. Hence we refer the dispute to joint mediation by two mediators, J.P. Singh and Sadhna Ramachandran, Senior Advocates of the Delhi High Court, who are two of the foremost experts in mediation in the country. Let the matter be referred to these two mediators who will mediate jointly. Each of them may appoint one co-mediator of their choice to assist them.”

Punjab had filed a suit for a declaration that the Centre's action of granting/extending exemptions/concessions to Jammu & Kashmir, Himachal Pradesh and Uttarakhand on June 14, 2002, and January 1, 2003, was unconstitutional and ultra vires and should be quashed.

Punjab in its suit alleged that the Centre had granted exemptions/concessions of Central excise, income tax and various other benefits to the industrial units in those States while not granting it to the industrial units in Punjab.

“This has had a serious impact on Punjab and existing industrial units are moving out of Punjab to the three States where better incentives, exemptions and concessions are available,” it contended.

It was alleged that there was discrimination against the industrial units in Punjab. “The goods manufactured in Punjab have to pay higher Central excise duty whereas the goods produced in the three States will be exempt or pay lower duty. Hence the goods manufactured in the State of Punjab will be expensive in comparison to the goods produced in the three States.”

Punjab alleged that the Centre had created a tariff and fiscal barrier “around the State” by giving tax exemptions and other benefits to the units in the neighbouring States while not granting them to those in Punjab. The Bench, while asking the mediators to explore a settlement through mediation, directed the matter to be listed after receiving the mediators' report.