Facts of the Case

The appellant, Oriental Insurance Company Limited, a Government of India undertaking, preferred two tax appeals (ITA No. 867/2009 and ITA No. 868/2009) before the High Court of Delhi under Section 260A of the Income Tax Act, 1961. At the time of the hearing, the appellant-undertaking had not obtained the requisite prior clearance/approval from the Committee on Disputes (COD) to pursue the litigation against another government department, although an application requesting such approval was pending before the Committee.


Issues Involved

·         Whether a tax appeal filed by a Public Sector Undertaking (PSU) can be entertained or kept pending on merits by the High Court in the absence of the mandatory clearance from the Committee on Disputes (COD).


·         What is the appropriate procedural mechanism for disposing of such appeals while preserving the appellant's right to seek revival post-clearance?

Petitioner’s Arguments

The learned counsel appearing for the petitioner (Oriental Insurance Company Limited) submitted that while the formal approval from the Committee on Disputes (COD) had not yet been secured, an active request/application in this behalf was already pending consideration before the Committee. It was implicitly urged that the appeals should not be dismissed outright on merits, thereby protecting their right to litigate once the administrative clearance was granted.


Respondent’s Arguments

The learned counsel for the respondent (Revenue/Income Tax Department) maintained the settled legal position that clearance from the Committee on Disputes (COD) is a mandatory condition precedent for Public Sector Undertakings to pursue litigation against the Government or its departments in courts of law.


Court Order / Findings

The Division Bench of the High Court of Delhi, comprising Hon’ble Mr. Justice A.K. Sikri and Hon’ble Mr. Justice Valmiki J. Mehta, observed that the appellant had not yet obtained the necessary COD approval.

Taking note of the pending application before the COD, the Court refrained from adjudicating the merits of the case and formally disposed of both the appeals (ITA No. 867/2009 & ITA No. 868/2009) by via a common order. However, to prevent prejudice to the public undertaking, the Court granted explicit liberty to the appellant to get the appeals revived within a period of one month from the date the COD grants the necessary approval.


Important Clarification

This ruling underscores a pragmatic judicial approach to the erstwhile "COD clearance mechanism" (established by the Supreme Court in the landmark ONGC cases). Instead of dismissing a PSU's appeal unconditionally for lack of administrative clearance—which could completely bar a public body from tax remedy due to bureaucratic delays—the High Court chose to conditionally dispose of the matter with a strict, time-bound revival window (one month) triggered automatically upon the receipt of the COD's approval.


Section Involved

·         Section 260A of the Income Tax Act, 1961 (Appeal to High Court)

·         Administrative Law Principles / COD Mechanism (As governed by the Supreme Court directives in ONGC vs. Collector of Central Excise)


Link to download the order - https://delhihighcourt.nic.in/app/case_number_pdf/2009:DHC:7237-DB/AKS28072009ITA8682009_160226.pdf

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