Facts of the Case

1.      The Income Tax Department filed multiple writ petitions challenging various orders passed by BIFR concerning sick industrial companies.

2.      The impugned BIFR orders had been passed between 2005 and 2009.

3.      The Department did not file appeals before AAIFR under Section 25 of SICA.

4.      Instead, the Department directly approached the Delhi High Court under Article 226 of the Constitution.

5.      The Department relied upon certain AAIFR decisions and a previous Delhi High Court judgment to justify bypassing the statutory appellate mechanism.

6.      The High Court considered the maintainability of the writ petitions and the effect of delay and laches.

Issues Involved

1.      Whether writ petitions under Article 226 are maintainable against BIFR orders when an effective statutory appellate remedy under Section 25 of SICA is available.

2.      Whether the Income Tax Department could bypass the appellate remedy and directly invoke the writ jurisdiction of the High Court.

3.      Whether the petitions were liable to be dismissed on account of delay and laches.

Petitioner’s Arguments

• The Income Tax Department challenged the legality of the BIFR orders.
• It contended that filing appeals before AAIFR would have been futile in view of certain AAIFR decisions already rendered on similar issues.
• Reliance was also placed upon judicial precedents to justify direct invocation of writ jurisdiction.

Respondent’s Arguments

• The respondents contended that Section 25 of SICA provides a complete statutory appellate mechanism against BIFR orders.
• The writ petitions were not maintainable because the Department had an effective alternative remedy.
• The petitions suffered from substantial delay since the impugned orders were passed several years before the filing of the writ petitions.
• The respondents argued that extraordinary writ jurisdiction should not be exercised in such circumstances.

Court Findings

• The Delhi High Court observed that the Department had bypassed the statutory appellate remedy available under Section 25 of SICA.
• The Court noted that the impugned orders covered a period extending from 2005 to 2009, indicating significant delay and laches.
• Mere apprehension regarding the outcome of an appeal could not justify bypassing the statutory appellate forum.
• The existence of an effective appellate remedy is an important consideration while exercising jurisdiction under Article 226.
• The Court declined to entertain the writ petitions and emphasized adherence to the statutory mechanism prescribed under SICA.
• Consequently, the challenge mounted directly before the High Court was not accepted.

Important Clarification

The judgment reiterates the settled principle that when a statute provides an effective appellate remedy, parties should ordinarily exhaust that remedy before invoking writ jurisdiction under Article 226 of the Constitution. A litigant cannot avoid the statutory appellate process merely because it anticipates an unfavourable outcome.

Sections Involved

• Article 226 of the Constitution of India
• Section 25 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA)

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2011:DHC:1737-DB/SKK23032011CW19492011.pdf

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