{"id":92234,"date":"2003-12-18T00:00:00","date_gmt":"2003-12-17T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/union-of-india-and-ors-vs-c-krishna-reddy-on-18-december-2003"},"modified":"2018-02-21T00:07:44","modified_gmt":"2018-02-20T18:37:44","slug":"union-of-india-and-ors-vs-c-krishna-reddy-on-18-december-2003","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/union-of-india-and-ors-vs-c-krishna-reddy-on-18-december-2003","title":{"rendered":"Union Of India And Ors vs C. Krishna Reddy on 18 December, 2003"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Union Of India And Ors vs C. Krishna Reddy on 18 December, 2003<\/div>\n
Bench: S. Rajendra Babu, G.P. Mathur<\/div>\n
           CASE NO.:\nAppeal (civil)  7127 of 1999\n\nPETITIONER:\nUNION OF INDIA AND ORS.\n\nRESPONDENT:\nC. KRISHNA REDDY\n\nDATE OF JUDGMENT: 18\/12\/2003\n\nBENCH:\nS. RAJENDRA BABU & G.P. MATHUR\n\nJUDGMENT:\n<\/pre>\n
JUDGMENT<\/p>\n
2003 Supp(6) SCR 1084<\/p>\n
The Judgment of the Court was delivered by<\/p>\n
G.P. MATHUR, J. : 1. This appeal by special leave has been preferred by
\nUnion of India against the judgment and order dated 22.9.1999 of a Division
\nBench of Madras High Court in a writ appeal whereby the order passed by a
\nlearned Single Judge on 22.9.1998 directing payment of Rs. 25 lakhs in
\naddition to the sum of Rs. 10 lakhs already paid by way of reward for
\ngiving information to custom authorities was partly modified.\n<\/p>\n
2. The respondent C. Krishna Reddy filed a writ petition in the High Court
\nof Madras claiming an amount of Rs. 1,71,43,272 by way of reward for having
\ngiven information to the concerned officers of the Department of Customs
\nand Central Excise. The case set up in the writ petition, in brief, was
\nthat M\/s. Sanjeevani Fodder Products Pvt. Ltd., (hereinafter referred as
\n‘Sanjeevani’) and M\/s. FOMETA India Machines Pvt. Ltd., (hereinafter
\nreferred as ‘FOMETA’) had evaded Customs duty amounting to approximately
\nRs. 3 crores by contravening the conditions of ad hoc exemption Order No.
\n103\/87 dated 30.3.1987 as amended. M\/s. Sanjeevani had got the said
\nexemption order from the Government of India exempting 50 Fodder Production
\nUnits to be imported by them subject to the condition that they would
\ndonate these machines to Bharat Krishak Samaj (BKS) within 15 days from
\ntheir clearance and BKS would use them only for demonstration purposes and
\nwould not sell, transfer or dispose of these machines for a period of five
\nyears. M\/s. Sanjeevani had imported and cleared these machines through the
\nPort of Madras free of duty in terms of the said exemption order. Though
\nM\/s. Sanjeevani had produced documents before the Customs authorities
\nshowing donation of these machines to BKS but the same remained in their
\ncontrol and possession at their own sites and also at the site of M\/s.
\nFOMETA and were being utilised for commercial production of fodder and
\nhence both the conditions of the ad hoc exemption Order were contravened.
\nThe exemption Order was for 50 machines but actually 56 machines had been
\nimported and 5 out of them had been sold to some Government Departments.
\nThe case of writ petitioner (respondent herein) further was that on the
\nbasis of the information furnished by him and inquiries made by the
\nauthorities of the Department they came to know that M\/s. Sanjeevani had
\nstarted selling the Fodder Production Units. After the import of the
\nmachines in CKD condition, M\/s. Sanjeevani got the Fodder Production Units
\nassembled at Gummidipoondi at the work place of M\/s. FOMETA and thereafter
\n12 units were installed in Bolaram, 12 in Bulandshahir, 12 in Bagru and the
\nbalance 14 FPUs were to be stationed at Jaisalmer. Some of the units were
\noperational as per the investigation. The Department thereafter issued a
\nshow cause notice dated 12.2.1990 and proceedings were initiated for
\nconfiscation of the goods. The case was adjudicated by Collector of Customs
\n(Judicial) Madras who passed an order on 5.3.1993 directing for
\nconfiscation of the goods with an option for redemption of the same on
\npayment of fine and a penalty of Rs. 50 lakhs was imposed upon M\/s. FOMETA
\nand personal penalty was imposed upon some Directors of the company. After
\nthe decision of the Commissioner of Customs (Madras) the writ petitioner
\nsent a letter dated 15.4.1993 to the Deputy Director, Directorate of
\nRevenue Intelligence, Madras, to sanction him the reward keeping in view
\nthe duty, fine and penalty levied in the case. The Department sanctioned an
\namount of Rs. 5 lakhs on 6.11.1993 as an advance reward which was paid to
\nhim and thereafter another sum of Rs. 5 lakhs was sanctioned on 26.4.1995
\nand in this manner he received only Rs. 10 lakhs. The writ petition was
\naccordingly filed claiming the balance amount of reward in terms of the
\nguidelines issued by the Department.\n<\/p>\n
3. Counter-affidavit on behalf of the respondent was filed by Shri R. Mohan
\nDoss, Assistant Director in the Directorate of Revenue, Intelli-gence,
\nMadras wherein it is stated that on the basis of the information received,
\ninvestigation was done and it was found that M\/s. Sanjeevani and M\/s.
\nFOMETA had evaded customs duty amounting to Rs. 3 crores by contravening
\nthe conditions of ad hoc examination order No. 103\/87 dated 30.3.1987. The
\ndetails of the manner of import, misutilisation of the machines,
\ncontravention of the exemption order, the proceedings initiated by the
\nCollector of Customs and the orders passed by him have also been given. It
\nis averred in para 7 and 10.7 of the counter affidavit that only one party
\nnamely, Indian Grass Land and Fodder Research Institute, Jhansi, deposited
\nthe redemption fine of Rs. 2 lakhs in respect of one confiscated unit but
\nin respect of remaining 55 units nobody came forward to clear the same on
\npayment of redemption fine and duty and the penalty amounts could not be
\nrecovered from the persons concerned. The seized articles could not be
\nauctioned as M\/s. Sanjeevani had taken loans against the Fodder Production
\nUnits from financial institutions and such financial institutions have also
\nclaimed the units which had been hypothecated to them. Even though no duty,
\nfine or penalty could be realised from the persons concerned but an amount
\nof Rs. 10 lakhs was sanctioned and disbursed to the writ petitioner by way
\nof reward.\n<\/p>\n
4. The is important to note that in the counter-affidavit, it is nowhere
\nadmitted that the department conducted the investigation in the matter of
\nimport of machines and availing of exemption notification by M\/s.
\nSanjeevani and M\/s. FOMETA only on the basis of information furnished by
\nthe Writ Petitioner. Therefore, the main ground for claiming the reward had
\nnot been admitted. The writ petitioner did not substantiate his claim in
\nany manner that it was only on the basis of the information supplied by him
\nthat the proceedings had been commenced by the Department which ultimately
\nled to passing of an order of confiscation, fine and penalty.\n<\/p>\n
5. The learned Single Judge proceeded on the footing that admittedly the
\nwrit petitioner gave the information with regard to contravention made by
\nM\/s. Sanjeevani and M\/s. FOMETTA and thereafter Units were seized,
\nadjudication proceedings were initiated and finally a duty of Rs. 3.37
\ncrores apart from redemption fine of Rs. 3.80 crores and penalty of Rs.
\n1.55 crores was levied and consequently the writ petitioner is entitled for
\na reward of 20 per cent of the total amount. The learned Judge further held
\nthat when the writ petitioner passed on the information on a reasonable
\nhope and expectation that he will get the award, the principle of
\nlegitimate expec-tation would come into play and he was entitled to the
\naward. The plea of Union of India that writ petitioner was not entitled to
\nclaim the reward as a matter of right since the orders issued by Government
\nin this regard are merely guidelines and do not have any force of law was
\nnot accepted. The learned Judge also brushed aside the contention of the
\nappellant that in spite of best efforts the Department had not been able to
\nrealise any amount and till such realisation was made it was not possible
\nto give any amount by way of reward. The learned Judge went on to hold that
\ntaking in to consideration the fact that the writ petitioner had been paid
\na sum of Rs. 10 lakhs, he should be paid an additional sum of Rs. 25 lakhs
\nwithin four weeks from the date of receipt of the order. The Department was
\nfurther directed to determine his entitlement of the reward in respect of
\nthe balance amount and pass an order with regard to disbursement of the
\nsame within three months.\n<\/p>\n
6. The Union of India preferred a writ appeal against the decision of
\nlearned Single Judge wherein it was submitted that as per the guidelines
\nwhich had been modified on 30.3.1989 the reward can be granted only after
\nthe issue had been finally adjudicated and the amount had been realised.
\nThe Division Bench, however, held that the amount of the reward had to be
\npaid in accordance with the guidelines as they stood before the amendment
\nand the amended guidelines cannot be given any retrospective operation.
\nTaking the view that the amount directed to be paid by the learned Single
\nJudge was on the higher side, it was directed that department should pay a
\nsum of Rs. 5 lakhs within three weeks from the date of the receipt of the
\norder and a further sum of Rs. 5 lakhs within three weeks thereafter. In
\nthe event the Department failed to pay the aforesaid amount within the time
\ngranted, it would pay the whole amount as per the order of the learned
\nSingle Judge.\n<\/p>\n
7. Learned counsel for the appellant Union of India has submitted that the
\nguidelines issued on 30.3.1985 regarding payment of award had been amended
\non 30.3.1989 and since the present case the Collector of Customs had
\ndecided the matter subsequently on 5.3.1993, it is the amended guidelines
\nwhich would be applicable and the payment had to be made in accordance with
\nthe said guidelines. Learned counsel has also submitted that reward is
\npurely an ex-gratia payment, which subject to the guidelines, may be
\ngranted on the discretion of the competent authority and a decision
\nregarding claim of amount is to be taken upon consideration of evidence
\nafter giving due regard to many factors and, therefore, no Writ of Mandamus
\ncan be issued by the Court to direct payment of a quantified amount by way
\nof reward. Learned counsel for the respondent, on the other hand, has
\nsubmitted that the policy dated 30.3.1985 having been uniformally followed
\nby the Government  in making  payment of the reward to informers, there was
\nno reason to depart from the same and the revised guidelines dated
\n30.3.1989 cannot be given any retrospective operation. Learned counsel has
\nfurther submitted that having regard to the facts and circumstances of the
\ncase, the order passed by the High Court was perfectly correct and calls
\nfor no interference.\n<\/p>\n
8.  In order to examine the question whether the respondent had any legal
\nright to claim the amount by way of reward as a matter of right, it is
\nnecessary to take note of the relevant provisions of the guidelines issued
\nby the Government of India on 30.3.1985 regarding the policy, procedure and
\norders in respect of grant of rewards to informers and Government servants
\nin case of seizure made and evasion of duty etc. detected under the
\nprovisions of the Customs Act, Central Excise and Salt Act, 1962, Gold
\nControl Act and Foreign Exchange Regulation Act. Paras 4 and 4.1 of the
\nguidelines read as under :\n<\/p>\n
“4. REWARD SHOULD NOT BE GRANTED AS A MATTER OF ROUTINE<\/p>\n
4.1. Reward is purely an ex-gratia payment which subject to the guidelines,
\nmay be granted on the absolute discretion of the authority competent to
\ngrant rewards and cannot be claimed by anyone as a matter of right. In
\ndetermining the reward which may be granted, the authority competent to
\ngrant reward will keep in mind the specificity and accuracy of the
\ninformation, the risk and trouble undertaken, the extent and nature of the
\nhelp rendered by the informer, whether infor-mation gives clues to persons
\ninvolved in smuggling, or their associates, etc.; the risk involved for the
\ngovernment servants in working out the case, the difficulty in securing the
\ninformation, the extent to which the vigilance of the staff led to the
\nseizure, special initiative, efforts and ingenuity displayed, etc. and
\nwhether, besides the seizure of contraband goods, the owners\/organisers\/
\nfinanciers\/racketeers as well as the carriers have been apprehended or
\nnot.”<\/p>\n
9. para 8 of the guidelines provides that all cases of grant of reward
\nshall be examined and approved by a Committee of three senior officers and
\nin case of grant of reward in excess of Rs. twenty lakh to an informer it
\nhas to be approved by a Committee consisting of the Head of Department,
\nDirector Preventive Operations and Additional Collector\/Deputy Director.
\nEnforcement\/Deputy Director, Anti Evasion\/DRI. The aforesaid guidelines
\nwere reviewed and the existing reward policy was modified on 30.3.1989 and
\nthe same reads as under :\n<\/p>\n
“The issue whether final reward should be given only after actual
\nrealisation of Central Excise duty, penalty, fine even if appeal\/ revision
\nproceeding has concluded resulting in confiscation and\/ or confirmation of
\ndemand has also been under-consideration of the Government. Keeping in view
\nall aspects of the matter, it has been decided that final reward should be
\npaid only after actual realisation of the Central Excise Duty\/Customs Duty,
\npenalty, fine etc. Para 6.3 of reward rules dated 30.3.85 stands amended
\naccordingly.”\n<\/p>\n
10.  The learned Single Judge and also Division Bench of the High Court
\nhave held that the reward has to be paid in accordance with the policy or
\nguidelines issued on 30.3.1985 and the subsequent modification of the
\npolicy done by the Government of India on 30.3.1989 will not govern the
\nsituation as the same was not retrospective in operation.\n<\/p>\n
11. In our opinion, the view taken by the High Court that the revised
\nguidelines would not apply is patently erroneous both on the fact situation
\nof the case and also as a principle of law. The respondent has himself
\naverred in para 14 of the writ petition that the Collector of Customs,
\nMadras decided the case by his order dated 5.3.1993 and thereafter he
\nstarted contacting the officers of the Department for payment of the
\nreward. He, therefore, made a claim for grant of reward for the first time
\nin 1993. In Union of India v. R. Padmanabhan,<\/a> (2003) JT 7 SC 196 exactly
\nsame question was examined and it was held that being ex-gratia no right
\naccrues to any sum as such till it is determined and awarded and, in such
\ncases, normally it should not only be in terms of the guidelines and
\npolicy, in force, as on the date of consideration and actual grant but has
\nto be necessarily with reference to any indications contained in this
\nregard in the scheme itself. It was also held that the question of any
\nvested rights accrued being protected from any subsequent amendments would
\nnot arise in such a case and, therefore, the guidelines as are in force on
\nthe date of consideration will really be applicable and relevant.\n<\/p>\n
12.  The scheme or the policy of the Government of India dated 30.3.1985
\nshows that the authority competent to grant the reward, while taking a
\ndecision regarding the entitlement of the person concerned has to keep many
\nfactors in his mind like specificity and accuracy of the information, the
\nrisk and trouble undertaken, the extent and nature of the help rendered by
\nthe informer, whether information gives clues of the persons involved in
\nsmuggling or their associates, the difficulty in securing the information,
\nthe risk involved for the government servants in working out the case and
\nwhether apart from seizure of contraband goods, the
\nowners\/organisers\/financiers\/racketeers have been apprehended. The scheme
\nfurther mentions that reward is an ex-gratia payment and subject to the
\nguidelines and may be granted on the absolute discretion of the authority
\ncompetent and further that no one can claim the reward as a matter of
\nright. The High Court in writ jurisdiction cannot examine or weigh the
\nvarious factors which have to be taken into consideration while deciding a
\nclaim regarding grant of reward. These are matters exclusively within the
\ndomain of the authorities of the Department as they alone can weigh and
\nexamine the usefulness or otherwise of the information given by the
\ninformer. In the writ petition filed by the respondent, no details had been
\ngiven on the relevant issues. If the grant of reward cannot be claimed as a
\nmatter of right it is not understandable as to how a Writ of Mandamus can
\nbe issued commanding the Government to give a particular amount by way of
\nreward. Though this specific plea was taken in paras 18 and 21 of the
\ncounter affidavit, yet neither the learned Single Judge nor the Division
\nBench adverted to this aspect of the matter.\n<\/p>\n
13. It is well settled by a catena of decisions of this Court that a Writ
\nof Mandamas can be granted only in a case where there is a statutory duty
\nimposed upon the officer concerned and there is a failure on the part of
\nthat officer to discharge the statutory obligation. The chief function of
\nthe writ is to compel performance of public duties prescribed by statute
\nand to keep subordinate tribunals and officers exercising public functions
\nwithin the limit of their jurisdiction. Therefore, in order that a mandamus
\nmay issue to compel the authorities to do something, it must be shown that
\nthere is a statute which imposes a legal duty and the aggrieved party has a
\nlegal right under the statute to enforce its performance. (See Bihar
\nEastern Gangetic Fishermen Co-operative Society Ltd. v. Sipahi Singh, AIR<\/a>
\n(1977) SC 2149 para 15; Lekharj Satram Dass Lalvani v. Deputy Custodian-
\ncum-Managing Officer, AIR (1966) SC 334 and Dr. Umakant Saran v. State of
\nBihar, AIR<\/a> (1973) SC 964.\n<\/p>\n
14. By the very nature of things no one has a legal right to claim a
\nreward. The Scheme itself shows that it is purely an ex-gratia payment
\nsubject to guidelines and may be granted on the absolute discretion of the
\ncompetent authority and cannot be claimed by anyone as a matter of right.
\nIn such circumstances the High Court committed manifest error of law-in
\nissuing a Writ of Mandamus directing the appellant to pay the amount to the
\nrespondent. The Department had already sanctioned Rs. 10 lakhs to the
\nrespondent before filing of the writ petition. In para 21(e) of the
\ncounter-affidavit it is averred that except for a single amount of Rs. 2
\nlakhs towards redemption fine no other amount either by way of custom duty,
\npenalty or redemption fine had been realised by the Department. The
\nimported machinery could not be confiscated or auctioned as the same had
\nbeen hypothecated to financial institutions from whom the importers had
\ntaken loan. In view of the amended policy the entitlement of the
\nrespondent, if any, could be a small amount as the Department had been able
\nto realize only Rs. 2 lakhs. This is not a case where some large scale
\nsmuggling operations had been brought to light or the identity of some hard
\ncore smugglers had been revealed as a result of the information given by
\nthe respondent. Yet the learned Single Judge of the High Court issued a
\nwrit that apart from Rs. 10 lakhs which had already been paid a further
\namount of Rs. 25 lakhs be paid to the respondent within four weeks and the
\nappellant was further directed to determine the respondent’s entitlement of
\nbalance amount of the reward and pay the same within three months. The
\nDivision Bench in appeal only partly modified the order and issued
\ndirections for payment of Rs. 5 lakhs within three weeks on the receipt of
\nthe copy of the order and a further sum of Rs. 5 lakhs within three weeks
\nthereafter. It was further directed that in case the department failed to
\ncomply with the aforesaid direction within the stipulated time, it will
\nhave to pay the rest of the amount as per the orders of the learned Single
\nJudge. We do not find any justification for passing these kind of
\nperemptory orders. It is not a case of any hardship having been caused like
\ndelay in making payment of compensation to victims of an accident or to an
\nagriculturist whose land may have been acquired depriving him of his only
\nsource of livelihood. On merits also we are clearly of the opinion that the
\norders passed by the High Court are not only wholly unwarranted but are
\nalso without any legal basis and are consequently liable to be set aside.\n<\/p>\n
15. The writ petitioner C. Krishna Reddy has also filed an appeal by
\nspecial leave challenging the judgment and order dated 22.9.1999 of the
\nDivision Bench of the High Court passed in the Writ Appeal. Since we have
\nheld that the writ petitioner is not entitled to any further amount, the
\nappeal preferred by him is liable to be dismissed.\n<\/p>\n
16.  In the result CA No. 7127 of 1999 filed by Union of India is allowed
\nand the judgment and order dated 22.9.1998 of the learned Single Judge and
\n22.9.1999 of the Division Bench of the High Court are set aside and the
\nwrit petition filed by the respondent is dismissed. C.A. No. 877 of 2000
\nfiled by C. Krishna Reddy is also dismissed.\n<\/p>\n
A.Q.                                                          C.A. No.\n7127\/1999 allowed.\n\nC.A. No. 877\/2000 dismissed.\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Union Of India And Ors vs C. Krishna Reddy on 18 December, 2003 Bench: S. Rajendra Babu, G.P. Mathur 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) […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-92234","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nUnion Of India And Ors vs C. 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