CASE NO.: Appeal (civil) 2769 of 1999 PETITIONER: Union of India RESPONDENT: Vs. R. Padmanabhan DATE OF JUDGMENT: 13/08/2003 BENCH: S. RAJENDRA BABU & DORAISWAMY RAJU. JUDGMENT:
J U D G M E N T
RAJENDRA BABU, J.:
The appellant, Union of India, which lost before the learned Single
Judge in O.P. No.12775 of 1991 and before the Division Bench of the Kerala
High Court in W.A. No.1077 of 1994, has filed this appeal.
The respondent, an IPS Officer, who, at the relevant point of time, was
serving as the DIG of Police, Northern Range, Kozhikode, which comprised in
his area of operation Revenue Districts of Kasargode, Cannanore, Kozhikode,
Palakkad, Wayanad and Malappuram. The appellant-Government not only
authorized the State Police authorities to effect seizure and investigation of
cases under the Central Excise & Salt Act, Customs Act, Gold Control Order
and Foreign Exchange Regulation Act, to prevent smuggling of gold and other
articles through the coastal areas of Kerala, as well as in other parts of the
country but with a view to create an incentive generally in the matter of
detection of such violations, proposed to grant awards to those responsible to
assist the Government in the same by being informants as well as
Government servants and issued Guidelines therefor in the Notification dated
30.3.1985; this was said to have been followed by certain amendments in the
matter of ceiling imposed, as to the quantum, by Notification dated 13.4.1989.
The respondent, claimed to have an informant in the matter in question,
worked out the information, supervised and executed an operation, which
resulted in the seizure of 900 gold biscuits valued approximately at Rs.3.5
crores, which were concealed in an House. He also was said to have
monitored the operation after seizure and on the basis of the action taken by
the authorities of the Customs Department thereon it was possible for the said
authorities to seize another 1600 gold biscuits from Irikkur in Cannanore
District. A reward of Rs.11.28 lakhs was said to have been sanctioned to 163
Officers of Customs as well as Police Department.
While so, though the claim of the respondent was also considered as
one responsible for the subject seizure, no sanction was made in his favour
for the reason that he was holding a rank considered higher than that of
Assistant Collector/Assistant Director and consequently held not eligible for
the reward in terms of clause 7.1. of the Notification dated 30.3.1985. After
finding not successful in his representation to the higher authorities, as well in
the Government of India, O.P. No.12775 of 1991 was filed in the High Court,
under Article 226 of the Constitution of India, to quash the proceedings
rejecting his claim and consequently direct the appellant to sanction and pay
the reward to the respondent herein, in accordance with the scales mentioned
and declare that he was entitled to the reward on the basis of the Guidelines
indicated. Overruling the objections of the appellant arrayed as respondent
before the High Court, the learned Single Judge, by his Order dated
19.7.1994, directed the Department to consider the claims of the respondent
herein on merits and fix the quantum of reward taking into account the role
played in the operations. The learned Judge was of the view that the
exclusionary rule in clause 7.2. of the Guidelines was intended to exclude, if
at all, only the officers above the level mentioned in the Departments
specified, from being rewarded on the basis of the value of the seizure and
not others. As for the amendment issued in April 1989, limiting the total
reward to Rs.1 lakh per seizure and a total limit of Rs.10 lakhs in ones career,
the High Court was of the view that the seizure in the case having been made
on 24.12.1989, cannot have retrospective effect and, therefore, not relevant.
Aggrieved, the appellant pursued the matter on appeal in W.A.
No.1077 of 1994 and the Division Bench also confirmed the order of the
learned Single Judge and directed the appellant to grant the reward to the
respondent after fixing the quantum in accordance with Ex.P.1 within two
months from the date of receipt of the copy of the order and that on failing to
do so or paying the same within a month from the date of its order, the
amount shall carry interest at 15% from the date of its due till payment.
Hence, this appeal.
The learned Additional Solicitor General appearing for the appellant
contended that being a pure ex gratia payment, it should be strictly in
accordance with the stipulations contained in the order itself and if the
claimant, in any case, does not satisfy the stipulations therein, the
Department not only can, in appropriate cases, consider such claims for any
lump sum reward but not at the rates specified to the eligible class or
category of claimants, on the basis of the value of seized goods. It was also
urged that departmental officers of other departments such as Police, B.S.F.
and Coast Guards etc. are envisaged under the Guidelines for being granted
such rewards subject to the restrictions in Clause 7-1 and the directions
issued to the contrary cannot be justified in law and being a matter pertaining
to the sphere of policy, it cannot be modulated, modified or restructured so as
to affect the very basis of the orders of the Government. The provisions
contained in the amendment made on 13.4.89 was also urged to apply to the
case. The learned Senior Counsel for the respondent, while adopting the
reasoning of the High Court, reiterated that the construction placed by the
High Court and the reasons assigned therefor are not only reasonable but
constitute just and reasonable method of implementation keeping into
account the avowed purpose and object underlying the very Scheme and
consequently, no interference is called for.
We have carefully considered the submissions of the learned counsel
appearing on either side. It is not only useful but necessary to advert to the
relevant portions of the Notification dated 30.3.1985 laying down the
Guidelines for the reward, since the High Court, learned Single Judge and the
Division Bench, seem to have dealt with the claims of parties purely on the
basis of clause 7 without noticing the other relevant and essential provisions,
apparently and may be on account of the fact that their attention was not
properly drawn by the appellant-Government, at that point of time. The
relevant portions of the Guidelines, necessary for appreciating the
contentions on either side, are as hereunder:-
“The Government have reviewed the existing policy,
procedure and orders in respect of grant of rewards to
informers and Government servants in case of seizures
made, infringement or evasion on duty, etc., detected
under the provisions of the following Acts:-
i) The Customs Act, 1962
ii) The Central Excise & Salt Act, 1944
iii) The Gold Control Act, 1968
iv) The Foreign Exchange Regulation Act, 1973
2. As a result, the revised guidelines are laid down in
the succeeding paras, All provisions/guidelines
issued on the subject may be deemed to be
modified to the extent indicated therein.
1.1 QUANTUM OF REWARDS
Seizures of contraband under the Customs Act
3.1.1 Informers and government servants will be
eligible for rewards upto 20% of the estimated
market value of the contraband goods seized. In
respect of gold silver, opium and other narcotic
drugs etc., the overall ceilings for rewards
(based on broadly 20% of the value of these
items, as reckoned by the Government for the
present) are shown in the Annex. These would
be subject to periodically revision in the light of
price fluctuations about which timely intimations
should be sent to DGRI every quarter to enable
him to recommend appropriate revision as and
when warranted, to the Ministry.
3.2 …………………………………………………………
3.2.1 Informers and Government servants will be
eligible for reward upto 20% of the duty, if any,
sought to be evaded plus 20% of the fine and
penalty levied/imposed and realized, provided
the amount does not exceed 20% of the market
value of the goods involved.
3.3. Seizures made, evasion of duty and other
infringement detected under the Central Excise & Salt
Act.
3.3.1 ………………………………………………………
3.4 Seizures under the Gold Control Act and cases of
other violations detected under the Gold Control
Act.
3.4.1 In case of seizures of gold bullion, the over
all ceiling for rewards to informers and Government
servants will be as indicated in serial No.1 of the
Annex.
3.4.2 In other cases, whether of seizure of
articles of gold/ornaments, or of detection of
“shortages”, informers and Government servants will
be eligible for reward upto 20% of the redemption
fined and/or penalty imposed and realized, provided
the amount does not exceed 20% of the market price
of the goods involved.
3.5 Cases of seizures/violations detected under FERA
3.5.1 ..…………………………………………………
4. REWARD SHOULD NOT BE GRANTED AS A
MATTER OF ROUTINE.
4.1 Reward is purely an ex-gratia payment which,
subject to 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 rewards
which may be granted, the authority competent to
grant reward will keep 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 to
persons involved in smuggling, or their
association, etc; the risk involved for the
Government servants in working out the case, the
difficulty in accruing the information, the extent to
which the vigilance on the staff led to the seizures,
special initiative, efforts and ingenuity displayed,
etc. and whether, besides the seizure of
contraband goods, the owners/organizers/
financiers/racketeers as well as the carriers have
been apprehended or not.
4.2 To Government servants, rewards may ordinarily
be paid upto 10% of the estimated market value of
the goods involved (half of the maximum rewards
indicated in respect of gold, opium and other
narcotic drugs, etc. in the Annex.). Rewards in
excess of this limit, but not exceeding 20% (or as
in Annex., in respect of gold, silver, narcotics, etc.)
of the said value, maybe considered in cases
where the Government servant has exposed
himself to a great personal hazard or displayed
exemplary courage, commendable initiative,
ingenuity or his personal efforts have been mainly
responsible for the detection of the goods.
5. STAGE OF PAYMENT OF REWARD
Payment of advance rewards
5.1 Advance reward may be paid to informers and
Government servants upto 50% of the expected final
reward immediately on seizure in respect of the
following categories of goods, namely:-
a) gold/silver bullion and goods which are
notified or specified under the Customs
Act, 1962;
b) arms and ammunition, explosives;
c) opium and other narcotic drugs;
d) goods not declared which are seized in
the Customs area or Customs waters;
and
e) freely convertible foreign exchange in the
form of currency notes.
5.2 In other (“Smuggling”) cases of seizures of
contraband goods, advance reward upto 25% of the
expected final reward may be paid immediately after
seizure, if the authority competent to sanction
reward is satisfied that the goods seized are
reasonably expected to be confiscated on
adjudication and the order is likely to be sustained in
appeal/revision proceedings.
5.3 In all other cases, whether of seizure of
evasion/infringement detected on the basis of
documents, 25% of the expected final reward may
be paid after the issue of a show cause notice
provided the authority competent to sanction reward
is satisfied that there is reasonable chance of
confiscability/infringement/evasion, as the case may
be, being established in adjudication and sustained
in appeal/revisionary proceedings.
5.4 In exceptional cases, the Heads of
Departments may, having regard to the value of the
seizures effected and magnitude of the evasion or
infringement detected and magnitude of the evasion
or infringement detected and special efforts or
ingenuity displayed by the officers concerned,
sanction and announce the grant of suitable rewards
on the spot to be adjusted against the advance
reward that may be sanctioned.
6. Final rewards will be paid after adjusting the
advance rewards, if any, paid in the
mentioned/indicated in proceeding paras.
6.2 In respect of the goods described in para
5.1, the remaining 50% of the reward will be
sanctioned both to the informers and Government
servants on adjudication of the case resulting in
confiscation of the goods. If, however, the party
concerned delays adjudication proceedings by
contesting the imposition of penalty only but the
confiscation of the goods, the final reward may be
sanctioned even prior to the conclusion of the
adjudication proceedings.
6.3 In all other cases, 25% of the expected final
reward may be paid after adjudication resulting in
confiscation and/or confirmation of the demand,
infringement and the remaining 50% may be paid after
the conclusion of the appeal/revision proceedings by
the appropriate authorities (such as Tribunal, FERA
Board, etc.) resulting in the upholding of confiscation,
demand, fine penalties, etc. imposed under the
respective Acts.
7. TO WHOM REWARD MAY BE PAID
7.1 Ordinarily, informers and Government servants
(upto the level of Group `A’ Superintendents/Assistant
Collectors of Customs and Central Excise/Assistant
Directors will be eligible for reward depending on the
contribution made by them as a team as well as
individually with regard to the collection of
intelligence, surveillance, effecting of seizure etc.
Due credit should be given to the staff employed on
investigation.
7.2 Group `A’ officers above the level of Assistant
Collector/Assistant Director will not be eligible for
reward on the basis of value of the seizures, etc.
However, in appropriate cases, government may
consider, in consultation with CCA/DGRI Director,
Anti Evasion, the grant of lump-sum
payment/advance increments and/or recognitions, in
any other manner of the services rendered by them
for which purpose the Heads of Department should
forward their recommendation to the aforementioned
officers with a copy to the Ministry.
8. ……………………………………………………
8.1.1 ……………………………………………………
8.1.2 ……………………………………………………
8.1.3 All case of grant of reward to Government
servants in excess of the limits specified above
should be examined and approved by a Committee
consisting of the following :-
Amount of reward for Constitution of the Govt. Servants Committee 1. Rewards in excess of Rs.10,000/- 1. Head of Department
but not exceeding Rs. One lac 2. Additional Collector
and
3. Senior most Deputy
Collector/ Dy. Collector
all the Hqrs.
2. Rewards in excess of Rs.1 Lac 1. Head of Department
and upto Rs.5 Lacs 2. Director, Preventive
Operations and
3. Additional Collector/
Special Director in
charge of the Hqrs.
3. Reward in excess of Rs.5 Lacs 1. Concerned Member of
the C.B.E.C. or G.C.A.
as the Case may and
2. DGRI/Director,
Enforcement/ Director,
Anti-Evasion as the
case may be, and
3. the Head of
Department
concerned.”
It is not in controversy that an amendment came to be issued vide
P.No.R-13011/5/89.Ad.v. of the Department of Revenue in April 1989 limiting
the total reward to Rs.1 lakh for seizure and to a total limit of Rs.10 lakhs in
ones career, though there was dispute about its relevance and applicability to
the claim of the respondent on the ground that it had no retrospective
application to the seizure effected on 24.2.1989, in this case.
The decision of the Division Bench rendered in affirmance of the one
rendered by the Single Bench suffer from a serious infirmity in not adverting
properly to the basics and fundamentals of the Scheme for Rewards and in
assuming to the contra that when an informer could be given liberally, the
Government servant also, must be shown the same consideration, whereas a
careful scanning through may go to show that an Informant is placed on a
different pedestal than a Government servant. The rewards are also to be
and can be “upto 20%” or as the case may be and not that invariably it must
be as a rule 20% of the estimated market value. Reward is purely an ex
gratia payment, subject to the Guidelines on the discretion of the competent
authority, though it cannot arbitrarily be denied or refused at whim or fancy
and it should specifically conform to and must be shown to fall or claimed
within the four corners of the Scheme and not by any deviation or modulation
of the Scheme, as the Courts think it should be and if it cannot come strictly
within the four corners of it, such claim may have to be dealt with only under
the residuary powers enabling the grant of reward. That apart, 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. The line of decisions relation to vested rights accrued
being protected from any subsequent amendments may not be relevant for
such a situation and it would be apposite to advert to the decision of this
Court reported in State of Tamil Nadu Vs. M/s Hind Stone & Ors. [(1981) 2
SCC 205]. That was a case wherein this Court had to consider the claims of
lessees for renewal of their leases or for grant of fresh leases under the Tamil
Nadu Minor Mineral Concession Rules, 1959. The High Court was of the
view that it was not open to the State Government to keep the applications
filed for lease or renewal for a long time and then dispose them of on the
basis of a rule which had come into force later. This Court, while reversing
such view taken by the High Court, held that in the absence of any vested
rights in anyone, an application for a lease has necessarily to be dealt with
according to the rules in force on the date of the disposal of the application,
despite the delay, if any, involved although it is desirable to dispose of the
applications, expeditiously. Therefore, the reward could not have been
allowed in this case completely ignoring the amendments, which came into
force in April 1989, merely because the seizure was in February 1989. That
apart, under the Scheme final reward is postulated only on adjudication of the
case resulting in confiscation of the goods as found stated in clause 6 of the
Guidelines and that should, therefore, be crucial and relevant date for
consideration of award and, therefore, the Guidelines, as are in force on that
date, will be really applicable and would relevant. Consequently, the
exclusion of the amendment, which was made in April 1989, from
consideration in this case, may not be proper, and the conclusion to the
contrary by the High Court, cannot be sustained.
The interpretation placed as though the restrictions in clause 7 will
have no relevance to the officers other than the officers specified of the
Department of Central Excise/Customs cannot be justified, either on the
language of the Guidelines or on the conspectus of the Scheme for rewards.
The classification made is between informers on the one hand and
Government servants on the other – and not with reference to any particular
class of category of Government servants alone. The specification of certain
officers are meant to illustrate the level and standard of their category/class
with particular reference to the gradation of offices they hold and the granting
authority or courts, if need be, have to necessarily arrive at the equivalence in
other Departments as well – from among the other class of Government
servants, as a whole, serving either under the State or Central Government –
and the Scheme cannot be mutilated otherwise or moulded to suit the
consideration of a particular or given case, favourably. Clause 8.1.3 provides
the necessary clue in this regard and the consideration, if at all, has to be with
reference to the provisions contained in clause 4 and the various Guidelines
contained therein.
For all the reasons stated above, we are unable to accord approval to
the decision of the High Court. The judgment under challenge is, therefore,
set aside. On the facts of the case, it is found that on 4.7.1995, after the
decision of the learned Single Judge, a High Level Committee seems to have
considered the claims of the respondent for reward and recommended a sum
of Rs.1.25 lakhs, subject to the final decision of the High Court, and kept in
abeyance the actual disbursal of the sum. In the light of all these and instead
of relegating the matter for fresh review, by the authorities in the Government,
involving further delay also, we would instead direct the payment of a reward
of Rs.2.50 lakhs, treating the same as a special case and the delay already
involved and the decision said to have been taken – in order to give a quietus
to the problem. The sum directed by this order may be disbursed within a
period of sixty days from this date without fail. The appeal shall stand allowed
to the extent indicated above and subject to the payment ordered above. The
respondent has been driven to unnecessary litigation by completely denying
anything initially for all his efforts and had to face proceedings in this Court
also. The appellant will pay Rs.15,000/- for the costs of the respondent, while
bearing their own costs.