Dmt 1 wp345-11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGNAL CIVIL JURISDICTION WRIT PETITION NO. 345 OF 2011 XYZ ..Petitioner. versus Union of India & Ors. ..Respondents. ..... Mr. S.N. Kantawala with Memant H. Dave for the Petitioner. Mr. A.M. Sethana with Mr. M.S. Bhardwaj for the Respondents. ...... CORAM : DR.D.Y.CHANDRACHUD & A. A. SAYED, JJ. 29 September 2011. ORAL JUDGMENT (PER DR. D.Y. CHANDRACHUD, J): The Petitioner claims to be an informer. He claims to have furnished information to officers of the Directorate of Revenue Intelligence at Mumbai to the effect that a company Dmt 2 wp345-11 forming part of the More Group of Companies obtained advance licences and imported products such as polythene granules, copper cathodes, mulberry silk and RBD palmoline at the Ports of Calcutta, Nhava Sheva and Kandla and had evaded customs duty by under invoicing the imports and by acting upon forged documents. According to the Petitioner, the D.R.I. arrested Ashwini Kumar More, a director of one of the entities and recovered an amount of Rs. 22.8 crores towards duty liable to be paid. Demand drafts are stated to have been deposited with the State Bank of India, Kandla Branch. According to the Petitioner, the value of the goods seized and confiscated is Rs. 16 crores and the duty collected is Rs. 2.88 crores. 2. The Petitioner claims to be entitled to a reward representing 20% of the value of the goods confiscated and duty recovered. The Petitioner addressed letters on 19 June 1999, 5 December 2000, 15 April 2003, 2 October 2004, 3 September 2005, 23 July 2008 and 14 May 2010 to which there Dmt 3 wp345-11 was no reply either from the Additional Directors General of the DRI at Mumbai or at Ahmedabad. An Advocate s notice ’ was addressed on 1 October 2010. These proceedings have been instituted under Article 226 of the Constitution seeking the release of a reward in the amount of 20% in accordance with the guidelines issued by the Union Government in the Ministry of Finance, Department of Revenue dated 16 April 2004. 3. An affidavit in reply has been filed in these proceedings by the Assistant Director, DRI, Zonal Unit, Ahmedabad. It has been stated therein that information was received by the DRI in its Zonal unit at Mumbai which indicated that Mr. Ashwin Kumar More of More Overseas, Calcutta had imported goods such as Polyethylene Granules, Mulberry Silk & Copper Cathodes, etc., against bogus advance licences.. The imports were stated to be under invoiced. The Additional Director General, DRI by a letter dated 24 June 2004 stated that a case had been registered on the basis of specific Dmt 4 wp345-11 information received by the DRI, Mumbai. 31 show cause notices were issued by the DRI, Mumbai to various companies and the remaining cases were investigated by the DRI at Ahmedabad. The Additional Director General of the DRI, Mumbai by his letter dated 11 March 2011 stated that no confiscation / recovery has been made in the cases investigated by the Mumbai Zonal unit. As regards the cases investigated by DRI, Ahmedabad, upon completion of investigations, six show cause notices were issued. In one case relating to the import of RBD Palmolein by M/s. Associated Industries, which forms part of the More Group of Companies, certain amounts are stated to have been recovered upon the provisional release of seized goods and on appropriation of amounts payable by various buyers to the importer. A case was registered against Associated Industries, Tinsukia, who had purchased RBD Palmolein on a high seas sales basis from four firms in the More Group wherein it is alleged that the imports were under- valued and bogus quantity based licences were utilised. Show cause notices were issued on 25 September 1998 and 18 Dmt 5 wp345-11 November 1998. The Commissioner of Customs, Kandla passed orders on 6 December 2000 for confiscation, penalty and interest. Various amounts representing the sale proceeds came to be adjusted. An amount of Rs. 1.10 crores is stated to have been paid in terms of the order of adjudication. Another show cause notice issued to Associated Industries, Tinsukhia is stated to have resulted in an order of adjudication dated 29 July 2002 whereunder an amount of Rs. 69.03 lacs which was deposited with the Commissioner of Customs was directed to be confiscated. 4. In para 10 of the affidavit in reply it has been stated that the DRI Zonal Unit at Mumbai forwarded with a letter dated 13 August 2004 a copy of DRI-1 (the form filled by the informer). However, it has been stated that the information recorded in the DIR-1 form indicated that Mr. Ashwin Kumar More of More Overseas, Calcutta was importing Polypropylene HDPE, Mulberry Silk and Copper Cathode and under-invoicing the imports. Nine companies belonging to the importer were Dmt 6 wp345-11 listed. It has been stated that instead of mentioning Associated Industries, the information disclosed the name of an entity by the name of Associated Agencies and the commodity RBD Palmolein is not mentioned in the information supplied. 5. Finally, it has been stated in the affidavit in reply that in the case of Associated Industries the CESTAT had by an order dated 16 October 2001 remanded the proceedings in appeal. The affidavit records that the final status of the appeal is not known. 6. The Government of India in the Ministry of Finance, (Department of Revenue) has formulated guidelines on 20 June 2001 regarding grant of rewards to informers and Government Servants. These guidelines were modified on 16 April 2004. Under the guidelines certain rewards upto 20% of the net sale proceeds of contraband goods seized and/or the amount of duty evaded plus the amount of fine or penalty levied/imposed Dmt 7 wp345-11 and recovered can be granted. The ceilings are subject to periodical revision. Clause 5.1 of the Guidelines stipulates that a 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 as a matter of right. The factors which are to be taken into account in determining whether a reward should be granted, have been elucidated in clause 5.1 of the Guidelines as follows: 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 information gives clues to persons involved in smuggling, or their associates etc., the risk involved for the Govt. servants in working out the case, the difficulty in securing the information, the extent to which the vigilance of the staff led to Dmt 8 wp345-11 the seizure, 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. ” Clause 6.1 of the Guidelines stipulates that an advance or interim reward may be paid to informers and to Govt. servants of upto 50% of the total admissible reward, immediately on seizure, in respect of the following :- (i) gold / silver bullion; (ii) arms and ammunition, explosives; and (iii) opium and other narcotic drugs. Under Clause 6.2, in other cases of outright smuggling, involving seizures of contraband goods, including foreign currency, Dmt 9 wp345-11 advance/interim reward upto 25% of the total admissible reward may be paid to informers and Govt. servants, immediately after seizure, if the authority competent to sanction a reward is satisfied that the goods seized are reasonably expected to be confiscated on adjudication and the order of adjudication is likely to be sustained in appeal or revision. Clause 6.3 stipulates that in all other cases, including Customs appraising cases, normally, no advance/interim reward will be granted. However, in cases where the parties/persons involved have voluntarily paid the amount of duty evaded during the course of investigation, admitting their liability, 25% of the voluntary deposits may be considered for payment as advance / interim reward to the informers. Under Clause 7.1 final rewards both to officers as well as informers can be sanctioned and disbursed only after conclusion of adjudication/appeal/revision proceedings. Clause 8 of the Policy both in its original form and as amended provides for a delegation of powers for sanctioning and payment of rewards. The power to sanction and pay rewards Dmt 10 wp345-11 is delegated to Committees separately specified depending upon the monetary limit involved in the case. Clause 9 provides that a final reward sanctioned by the duly constituted authority or committee shall not be reviewed or reopened. However, in most exceptional cases where DGRI, DGCEL, or the Chief Commissioner is satisfied that review of the final reward sanctioned by the competent authority is absolutely necessary to redress any grave injustice meted out to the informer/ Govt. servant, the Government may review the final reward sanctioned on the specific recommendations of the Board. 7. We have adverted to the relevant clauses of the scheme for payment of rewards to informers or as the case may, to the Government servants. The basic principle which underlies the grant of a reward is that it is an ex-gratia and not a matter of right. This aspect has been emphasised in the judgment of the Supreme Court in the case of Union of India vs. C. Krishna Reddy 1. The Supreme Court while dealing with 1 2004 (163) ELT 4 (S.C.) Dmt 11 wp345-11 the guidelines formulated for grant of rewards held as follows :- 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.” The Supreme Court held that a reward is an ex-gratia which is Dmt 12 wp345-11 subject to guidelines and is granted on the absolute discretion of the competent authority and cannot be claimed as a matter of right. In that case the High Court was held to have committed a manifest error in issuing a Writ of Mandamus directing the Union of India to pay a reward to the Respondent. 8. In the present case, however, it has been urged on behalf of the Petitioner that the authorities have, as the affidavit in reply would disclose, admittedly recovered certain amount. According to the Petitioner, his claim has not even been placed for consideration before the Committee which is duly constituted by the Guidelines. The submission which is urged is that from a reading of the affidavit in reply it is not disputed that the Petitioner had in fact supplied information and was an informer who had furnished information in regard to imports undertaken by the More Group of companies on the basis of bogus advance licences. Learned Counsel appearing on behalf of the Petitioner has drawn the attention of the Dmt 13 wp345-11 Court to the documentary material which has been filed by the Revenue in the form of a compilation of documents as well as to what is stated in the affidavit in reply to urge that as a matter of fact recoveries have been made. Moreover, it was urged that the affidavit in reply states that although the CESTAT had in respect of certain proceedings remanded the proceedings way back on 16 October 2001 which is nearly 10 years ago, the Department is not in a position to state at present as to what is the status of those proceedings. 9. On the other hand, learned Counsel appearing on behalf of the Respondents has urged that grant of rewards is not a matter of right. Moreover, the proceedings which were remanded back by the CESTAT do not appear to have attained finality and the Department would take necessary steps to expeditiously conclude the adjudication. 10. In these proceedings under Article 226 of the Constitution, we are not inclined to grant the relief which is Dmt 14 wp345-11 sought which is that the Respondents should be directed to pay to the Petitioner a reward representing 20% of the value of the recoveries made on the basis of the guidelines of 16 April 2004. The grant of a reward is not a matter of right. Whether a reward should be granted is a matter which has to be considered on the basis of the applicable guidelines. The considerations which have to be borne in mind by the competent authority to grant a reward include the specificity and accuracy of the information, the risk undertaken, the extent and the nature of the help rendered by the informer, the difficulty in securing the information and other such factors. In that view of the matter, particularly since a reward is an ex- gratia, the High Court in its jurisdiction under Article 226 would not be justified in directing that a particular payment should be made. 11. We, however, do find a considerable degree of substance in the grievance of the Petitioner that the case of the Petitioner has not even been considered by the Committee. Dmt 15 wp345-11 Both under the original guidelines of 20 June 2001 and the amended guidelines which were issued on 16 April 2004 the power to determine as to whether a reward should be granted is delegated to a Committee which is constituted depending upon the amount involved. Whether the circumstances of the case are such that the Petitioner should or should not be granted a reward is a matter which should be evaluated by the Committee. We find from the record that the Petitioner has continuously addressed communications to the 2nd and 3rd Respondents between December 2000 and October 2010. None of those communications has elicited a reply. From the material which has been disclosed in the affidavit in reply and the correspondence which forms part of the compilation of documents placed on record by the Union of India, we are of the view, that this is a case where the claim of the Petitioner should be considered by the Committee. We clarify that we have not expressed any view on the role of the Petitioner or about the nature of the information that is alleged to have been disclosed by the Petitioner. These are matters which Dmt 16 wp345-11 have to be determined by the Committee in the light of the Guidelines. We clarify that we are not directing the grant of a reward. 12. We accordingly dispose of the Petition by directing that the claim of the Petitioner for the grant of a reward shall be evaluated by the Committee in accordance with the relevant Guidelines which hold the field. We expect that the Rewards Committee constituted under the Guidelines may do so with such expedition as is possible having regard to the facts and circumstances of the case. 13. The Petition is disposed of in the above terms with no order as to costs. (Dr. D.Y. Chandrachud, J.) (A. A. Sayed, J.)