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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

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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

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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     â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦ â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦ 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     â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â \200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦ 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   ..â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â \200¦â\200¦â\200¦â\200¦â\200¦â\200¦ 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

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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.

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 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.      â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦ â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦ 8.1.1   â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦ â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦ 8.1.2   â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦

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â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦ 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

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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 â\200\223 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 â\200\223 from among the other class of Government  servants, as a whole, serving either under the State or Central Government â\200\223  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 â\200\223 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.