CASE NO.: Appeal (civil) 7127 of 1999 PETITIONER: UNION OF INDIA AND ORS. RESPONDENT: C. KRISHNA REDDY DATE OF JUDGMENT: 18/12/2003 BENCH: S. RAJENDRA BABU & G.P. MATHUR JUDGMENT:
JUDGMENT
2003 Supp(6) SCR 1084
The Judgment of the Court was delivered by
G.P. MATHUR, J. : 1. This appeal by special leave has been preferred by
Union of India against the judgment and order dated 22.9.1999 of a Division
Bench of Madras High Court in a writ appeal whereby the order passed by a
learned Single Judge on 22.9.1998 directing payment of Rs. 25 lakhs in
addition to the sum of Rs. 10 lakhs already paid by way of reward for
giving information to custom authorities was partly modified.
2. The respondent C. Krishna Reddy filed a writ petition in the High Court
of Madras claiming an amount of Rs. 1,71,43,272 by way of reward for having
given information to the concerned officers of the Department of Customs
and Central Excise. The case set up in the writ petition, in brief, was
that M/s. Sanjeevani Fodder Products Pvt. Ltd., (hereinafter referred as
‘Sanjeevani’) and M/s. FOMETA India Machines Pvt. Ltd., (hereinafter
referred as ‘FOMETA’) had evaded Customs duty amounting to approximately
Rs. 3 crores by contravening the conditions of ad hoc exemption Order No.
103/87 dated 30.3.1987 as amended. M/s. Sanjeevani had got the said
exemption order from the Government of India exempting 50 Fodder Production
Units to be imported by them subject to the condition that they would
donate these machines to Bharat Krishak Samaj (BKS) within 15 days from
their clearance and BKS would use them only for demonstration purposes and
would not sell, transfer or dispose of these machines for a period of five
years. M/s. Sanjeevani had imported and cleared these machines through the
Port of Madras free of duty in terms of the said exemption order. Though
M/s. Sanjeevani had produced documents before the Customs authorities
showing donation of these machines to BKS but the same remained in their
control and possession at their own sites and also at the site of M/s.
FOMETA and were being utilised for commercial production of fodder and
hence both the conditions of the ad hoc exemption Order were contravened.
The exemption Order was for 50 machines but actually 56 machines had been
imported and 5 out of them had been sold to some Government Departments.
The case of writ petitioner (respondent herein) further was that on the
basis of the information furnished by him and inquiries made by the
authorities of the Department they came to know that M/s. Sanjeevani had
started selling the Fodder Production Units. After the import of the
machines in CKD condition, M/s. Sanjeevani got the Fodder Production Units
assembled at Gummidipoondi at the work place of M/s. FOMETA and thereafter
12 units were installed in Bolaram, 12 in Bulandshahir, 12 in Bagru and the
balance 14 FPUs were to be stationed at Jaisalmer. Some of the units were
operational as per the investigation. The Department thereafter issued a
show cause notice dated 12.2.1990 and proceedings were initiated for
confiscation of the goods. The case was adjudicated by Collector of Customs
(Judicial) Madras who passed an order on 5.3.1993 directing for
confiscation of the goods with an option for redemption of the same on
payment of fine and a penalty of Rs. 50 lakhs was imposed upon M/s. FOMETA
and personal penalty was imposed upon some Directors of the company. After
the decision of the Commissioner of Customs (Madras) the writ petitioner
sent a letter dated 15.4.1993 to the Deputy Director, Directorate of
Revenue Intelligence, Madras, to sanction him the reward keeping in view
the duty, fine and penalty levied in the case. The Department sanctioned an
amount of Rs. 5 lakhs on 6.11.1993 as an advance reward which was paid to
him and thereafter another sum of Rs. 5 lakhs was sanctioned on 26.4.1995
and in this manner he received only Rs. 10 lakhs. The writ petition was
accordingly filed claiming the balance amount of reward in terms of the
guidelines issued by the Department.
3. Counter-affidavit on behalf of the respondent was filed by Shri R. Mohan
Doss, Assistant Director in the Directorate of Revenue, Intelli-gence,
Madras wherein it is stated that on the basis of the information received,
investigation was done and it was found that M/s. Sanjeevani and M/s.
FOMETA had evaded customs duty amounting to Rs. 3 crores by contravening
the conditions of ad hoc examination order No. 103/87 dated 30.3.1987. The
details of the manner of import, misutilisation of the machines,
contravention of the exemption order, the proceedings initiated by the
Collector of Customs and the orders passed by him have also been given. It
is averred in para 7 and 10.7 of the counter affidavit that only one party
namely, Indian Grass Land and Fodder Research Institute, Jhansi, deposited
the redemption fine of Rs. 2 lakhs in respect of one confiscated unit but
in respect of remaining 55 units nobody came forward to clear the same on
payment of redemption fine and duty and the penalty amounts could not be
recovered from the persons concerned. The seized articles could not be
auctioned as M/s. Sanjeevani had taken loans against the Fodder Production
Units from financial institutions and such financial institutions have also
claimed the units which had been hypothecated to them. Even though no duty,
fine or penalty could be realised from the persons concerned but an amount
of Rs. 10 lakhs was sanctioned and disbursed to the writ petitioner by way
of reward.
4. The is important to note that in the counter-affidavit, it is nowhere
admitted that the department conducted the investigation in the matter of
import of machines and availing of exemption notification by M/s.
Sanjeevani and M/s. FOMETA only on the basis of information furnished by
the Writ Petitioner. Therefore, the main ground for claiming the reward had
not been admitted. The writ petitioner did not substantiate his claim in
any manner that it was only on the basis of the information supplied by him
that the proceedings had been commenced by the Department which ultimately
led to passing of an order of confiscation, fine and penalty.
5. The learned Single Judge proceeded on the footing that admittedly the
writ petitioner gave the information with regard to contravention made by
M/s. Sanjeevani and M/s. FOMETTA and thereafter Units were seized,
adjudication proceedings were initiated and finally a duty of Rs. 3.37
crores apart from redemption fine of Rs. 3.80 crores and penalty of Rs.
1.55 crores was levied and consequently the writ petitioner is entitled for
a reward of 20 per cent of the total amount. The learned Judge further held
that when the writ petitioner passed on the information on a reasonable
hope and expectation that he will get the award, the principle of
legitimate expec-tation would come into play and he was entitled to the
award. The plea of Union of India that writ petitioner was not entitled to
claim the reward as a matter of right since the orders issued by Government
in this regard are merely guidelines and do not have any force of law was
not accepted. The learned Judge also brushed aside the contention of the
appellant that in spite of best efforts the Department had not been able to
realise any amount and till such realisation was made it was not possible
to give any amount by way of reward. The learned Judge went on to hold that
taking in to consideration the fact that the writ petitioner had been paid
a sum of Rs. 10 lakhs, he should be paid an additional sum of Rs. 25 lakhs
within four weeks from the date of receipt of the order. The Department was
further directed to determine his entitlement of the reward in respect of
the balance amount and pass an order with regard to disbursement of the
same within three months.
6. The Union of India preferred a writ appeal against the decision of
learned Single Judge wherein it was submitted that as per the guidelines
which had been modified on 30.3.1989 the reward can be granted only after
the issue had been finally adjudicated and the amount had been realised.
The Division Bench, however, held that the amount of the reward had to be
paid in accordance with the guidelines as they stood before the amendment
and the amended guidelines cannot be given any retrospective operation.
Taking the view that the amount directed to be paid by the learned Single
Judge was on the higher side, it was directed that department should pay a
sum of Rs. 5 lakhs within three weeks from the date of the receipt of the
order and a further sum of Rs. 5 lakhs within three weeks thereafter. In
the event the Department failed to pay the aforesaid amount within the time
granted, it would pay the whole amount as per the order of the learned
Single Judge.
7. Learned counsel for the appellant Union of India has submitted that the
guidelines issued on 30.3.1985 regarding payment of award had been amended
on 30.3.1989 and since the present case the Collector of Customs had
decided the matter subsequently on 5.3.1993, it is the amended guidelines
which would be applicable and the payment had to be made in accordance with
the said guidelines. Learned counsel has also submitted that reward is
purely an ex-gratia payment, which subject to the guidelines, may be
granted on the discretion of the competent authority and a decision
regarding claim of amount is to be taken upon consideration of evidence
after giving due regard to many factors and, therefore, no Writ of Mandamus
can be issued by the Court to direct payment of a quantified amount by way
of reward. Learned counsel for the respondent, on the other hand, has
submitted that the policy dated 30.3.1985 having been uniformally followed
by the Government in making payment of the reward to informers, there was
no reason to depart from the same and the revised guidelines dated
30.3.1989 cannot be given any retrospective operation. Learned counsel has
further submitted that having regard to the facts and circumstances of the
case, the order passed by the High Court was perfectly correct and calls
for no interference.
8. In order to examine the question whether the respondent had any legal
right to claim the amount by way of reward as a matter of right, it is
necessary to take note of the relevant provisions of the guidelines issued
by the Government of India on 30.3.1985 regarding the policy, procedure and
orders in respect of grant of rewards to informers and Government servants
in case of seizure made and evasion of duty etc. detected under the
provisions of the Customs Act, Central Excise and Salt Act, 1962, Gold
Control Act and Foreign Exchange Regulation Act. Paras 4 and 4.1 of the
guidelines read as under :
“4. REWARD SHOULD NOT BE GRANTED AS A MATTER OF ROUTINE
4.1. Reward is purely an ex-gratia payment which subject to the guidelines,
may be granted on the absolute discretion of the authority competent to
grant rewards and cannot be claimed by anyone as a matter of right. In
determining the reward which may be granted, the authority competent to
grant reward will keep in mind the specificity and accuracy of the
information, the risk and trouble undertaken, the extent and nature of the
help rendered by the informer, whether infor-mation gives clues to persons
involved in smuggling, or their associates, etc.; the risk involved for the
government servants in working out the case, the difficulty in securing the
information, the extent to which the vigilance of the staff led to the
seizure, special initiative, efforts and ingenuity displayed, etc. and
whether, besides the seizure of contraband goods, the owners/organisers/
financiers/racketeers as well as the carriers have been apprehended or
not.”
9. para 8 of the guidelines provides that all cases of grant of reward
shall be examined and approved by a Committee of three senior officers and
in case of grant of reward in excess of Rs. twenty lakh to an informer it
has to be approved by a Committee consisting of the Head of Department,
Director Preventive Operations and Additional Collector/Deputy Director.
Enforcement/Deputy Director, Anti Evasion/DRI. The aforesaid guidelines
were reviewed and the existing reward policy was modified on 30.3.1989 and
the same reads as under :
“The issue whether final reward should be given only after actual
realisation of Central Excise duty, penalty, fine even if appeal/ revision
proceeding has concluded resulting in confiscation and/ or confirmation of
demand has also been under-consideration of the Government. Keeping in view
all aspects of the matter, it has been decided that final reward should be
paid only after actual realisation of the Central Excise Duty/Customs Duty,
penalty, fine etc. Para 6.3 of reward rules dated 30.3.85 stands amended
accordingly.”
10. The learned Single Judge and also Division Bench of the High Court
have held that the reward has to be paid in accordance with the policy or
guidelines issued on 30.3.1985 and the subsequent modification of the
policy done by the Government of India on 30.3.1989 will not govern the
situation as the same was not retrospective in operation.
11. In our opinion, the view taken by the High Court that the revised
guidelines would not apply is patently erroneous both on the fact situation
of the case and also as a principle of law. The respondent has himself
averred in para 14 of the writ petition that the Collector of Customs,
Madras decided the case by his order dated 5.3.1993 and thereafter he
started contacting the officers of the Department for payment of the
reward. He, therefore, made a claim for grant of reward for the first time
in 1993. In Union of India v. R. Padmanabhan, (2003) JT 7 SC 196 exactly
same question was examined and it was held that being ex-gratia no right
accrues to any sum as such till it is determined and awarded and, in such
cases, normally it should not only be in terms of the guidelines and
policy, in force, as on the date of consideration and actual grant but has
to be necessarily with reference to any indications contained in this
regard in the scheme itself. It was also held that the question of any
vested rights accrued being protected from any subsequent amendments would
not arise in such a case and, therefore, the guidelines as are in force on
the date of consideration will really be applicable and relevant.
12. The scheme or the policy of the Government of India dated 30.3.1985
shows that the authority competent to grant the reward, while taking a
decision regarding the entitlement of the person concerned has to keep many
factors in his mind like specificity and accuracy of the information, the
risk and trouble undertaken, the extent and nature of the help rendered by
the informer, whether information gives clues of the persons involved in
smuggling or their associates, the difficulty in securing the information,
the risk involved for the government servants in working out the case and
whether apart from seizure of contraband goods, the
owners/organisers/financiers/racketeers have been apprehended. The scheme
further mentions that reward is an ex-gratia payment and subject to the
guidelines and may be granted on the absolute discretion of the authority
competent and further that no one can claim the reward as a matter of
right. The High Court in writ jurisdiction cannot examine or weigh the
various factors which have to be taken into consideration while deciding a
claim regarding grant of reward. These are matters exclusively within the
domain of the authorities of the Department as they alone can weigh and
examine the usefulness or otherwise of the information given by the
informer. In the writ petition filed by the respondent, no details had been
given on the relevant issues. If the grant of reward cannot be claimed as a
matter of right it is not understandable as to how a Writ of Mandamus can
be issued commanding the Government to give a particular amount by way of
reward. Though this specific plea was taken in paras 18 and 21 of the
counter affidavit, yet neither the learned Single Judge nor the Division
Bench adverted to this aspect of the matter.
13. It is well settled by a catena of decisions of this Court that a Writ
of Mandamas can be granted only in a case where there is a statutory duty
imposed upon the officer concerned and there is a failure on the part of
that officer to discharge the statutory obligation. The chief function of
the writ is to compel performance of public duties prescribed by statute
and to keep subordinate tribunals and officers exercising public functions
within the limit of their jurisdiction. Therefore, in order that a mandamus
may issue to compel the authorities to do something, it must be shown that
there is a statute which imposes a legal duty and the aggrieved party has a
legal right under the statute to enforce its performance. (See Bihar
Eastern Gangetic Fishermen Co-operative Society Ltd. v. Sipahi Singh, AIR
(1977) SC 2149 para 15; Lekharj Satram Dass Lalvani v. Deputy Custodian-
cum-Managing Officer, AIR (1966) SC 334 and Dr. Umakant Saran v. State of
Bihar, AIR (1973) SC 964.
14. By the very nature of things no one has a legal right to claim a
reward. The Scheme itself shows that it is purely an ex-gratia payment
subject to guidelines and may be granted on the absolute discretion of the
competent authority and cannot be claimed by anyone as a matter of right.
In such circumstances the High Court committed manifest error of law-in
issuing a Writ of Mandamus directing the appellant to pay the amount to the
respondent. The Department had already sanctioned Rs. 10 lakhs to the
respondent before filing of the writ petition. In para 21(e) of the
counter-affidavit it is averred that except for a single amount of Rs. 2
lakhs towards redemption fine no other amount either by way of custom duty,
penalty or redemption fine had been realised by the Department. The
imported machinery could not be confiscated or auctioned as the same had
been hypothecated to financial institutions from whom the importers had
taken loan. In view of the amended policy the entitlement of the
respondent, if any, could be a small amount as the Department had been able
to realize only Rs. 2 lakhs. This is not a case where some large scale
smuggling operations had been brought to light or the identity of some hard
core smugglers had been revealed as a result of the information given by
the respondent. Yet the learned Single Judge of the High Court issued a
writ that apart from Rs. 10 lakhs which had already been paid a further
amount of Rs. 25 lakhs be paid to the respondent within four weeks and the
appellant was further directed to determine the respondent’s entitlement of
balance amount of the reward and pay the same within three months. The
Division Bench in appeal only partly modified the order and issued
directions for payment of Rs. 5 lakhs within three weeks on the receipt of
the copy of the order and a further sum of Rs. 5 lakhs within three weeks
thereafter. It was further directed that in case the department failed to
comply with the aforesaid direction within the stipulated time, it will
have to pay the rest of the amount as per the orders of the learned Single
Judge. We do not find any justification for passing these kind of
peremptory orders. It is not a case of any hardship having been caused like
delay in making payment of compensation to victims of an accident or to an
agriculturist whose land may have been acquired depriving him of his only
source of livelihood. On merits also we are clearly of the opinion that the
orders passed by the High Court are not only wholly unwarranted but are
also without any legal basis and are consequently liable to be set aside.
15. The writ petitioner C. Krishna Reddy has also filed an appeal by
special leave challenging the judgment and order dated 22.9.1999 of the
Division Bench of the High Court passed in the Writ Appeal. Since we have
held that the writ petitioner is not entitled to any further amount, the
appeal preferred by him is liable to be dismissed.
16. In the result CA No. 7127 of 1999 filed by Union of India is allowed
and the judgment and order dated 22.9.1998 of the learned Single Judge and
22.9.1999 of the Division Bench of the High Court are set aside and the
writ petition filed by the respondent is dismissed. C.A. No. 877 of 2000
filed by C. Krishna Reddy is also dismissed.
A.Q. C.A. No. 7127/1999 allowed. C.A. No. 877/2000 dismissed.