Facts of the Case

The respondent company was declared a sick industrial company and a rehabilitation scheme was sanctioned by BIFR under SICA. The scheme included tax concessions to be considered by the Income Tax Department.

Subsequently:

  • The company sought additional tax benefits through modification of the scheme.
  • BIFR modified the scheme (2013) directing authorities to consider additional concessions.
  • Later, BIFR directed the Income Tax Department to comply with the modified scheme.
  • The Income Tax Department challenged this direction, arguing:
    • The scheme had already expired.
    • Additional concessions could not be mandated without consent.

The matter reached the Delhi High Court after repeal of SICA and abatement of appellate remedy.

Issues Involved

  1. Whether a writ petition is maintainable after repeal of SICA.
  2. Whether a rehabilitation scheme continues beyond its stipulated duration.
  3. Whether BIFR can impose additional tax concessions without consent of authorities.
  4. Whether “to consider granting relief” creates a mandatory obligation.

 Petitioner’s Arguments

  • The rehabilitation scheme had expired; no further concessions could be granted.
  • BIFR cannot mandate additional concessions without extending the scheme.
  • The phrase “to consider” does not impose a binding obligation.
  • Income Tax Department had already granted all concessions originally contemplated.

Respondent’s Arguments

  • The scheme continues until formally terminated or deregistered.
  • BIFR retains jurisdiction even after net worth becomes positive.
  • Post-repeal of SICA, remedy lies before NCLAT.
  • Modified scheme remains binding and enforceable.

 Court Findings / Order

The Delhi High Court held:

Maintainability

  • Writ petition is maintainable under Articles 226/227 even after repeal of SICA.

Scheme Duration

  • Rehabilitation schemes are time-bound and do not continue indefinitely.

Additional Concessions

  • No additional concessions can be imposed:
    • Without extension/modification of scheme, and
    • Without consent of concerned authority (Section 19 SICA).

Interpretation of “To Consider”

  • The phrase “to consider” does not mean mandatory grant of relief.

 Final Order

  • Impugned BIFR order set aside.
  • Income Tax Department not obligated to grant additional tax concessions.

 Important Clarifications by Court

  • No inherent right to appeal exists unless provided by statute.
  • Writ jurisdiction survives even when statutory remedy is unavailable.
  • Consent of authority is mandatory where scheme involves financial concessions.
  • Scheme modification cannot indirectly impose obligations.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/VIB09082023CW48762017_182448.pdf

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