Discretion under Article 226 cannot be exercised when petitioner lacks bonafides

The Delhi High Court has held that Article 226 discretion should not be exercised when the conduct of the person invoking the jurisdiction is not genuine or bonafide. The judgement was passed in a writ petition by Wave Hospitality Pvt Ltd, challenging an order under Prevention of Money Laundering Act, 2002.

The petitioner was a company registered under the Companies Act. It stated that it had a separate legal entity having its own rights and liabilities under the law. Therefore, it was aggrieved by attachment of its property because of some proceedings was initiated against its stakeholders. This was opposed by Centre stating that grant of relief under Article 226 was a discretionary relief that depends on the conduct of the petitioner. They urged to pierce the Corporate Veil.

The Court observed that it was important to find out who was actually running or controlling the company and applied Lifting the Corporate Veil theory. The Court further stated, "the exercise of discretion under Article 226 in the matter of issuing a writ or granting equitable relief is a remedy in equity, which could be refused in case the conduct of the parties or persons invoking jurisdiction are not genuine or bona fide and the possibilities of misusing the process of law could not be ruled out."

The Court, in Wave Hospitality Private Limited v. Union of India, observed the application of discretion under Article 226 of the Constitution.