Union of India Vs. R. Padmanabhan  Insc 372 (13 August 2003)
Babu & Doraiswamy Raju. Rajendra Babu, J.:
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.
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
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
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.
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.
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.
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:-
Customs Act, 1962
The Central Excise & Salt Act, 1944
The Gold Control Act, 1968
The Foreign Exchange Regulation Act, 1973
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.
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.
………………………………………………………… 3.2.1 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.
Seizures made, evasion of duty and other infringement detected under the
Central Excise & Salt Act.
Seizures under the Gold Control Act and cases of other violations detected
under the Gold Control Act.
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
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
Cases of seizures/violations detected under FERA 3.5.1 ..…………………………………………………
REWARD SHOULD NOT BE GRANTED AS A MATTER OF ROUTINE.
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.
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.
STAGE OF PAYMENT OF REWARD Payment of advance rewards
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:-
gold/silver bullion and goods which are notified or specified under the Customs
and ammunition, explosives;
and other narcotic drugs;
not declared which are seized in the Customs area or Customs waters; and
convertible foreign exchange in the form of currency notes.
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.
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
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.
Final rewards will be paid after adjusting the advance rewards, if any, paid in
the mentioned/indicated in proceeding paras.
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.
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
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.
credit should be given to the staff employed on investigation.
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.
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.
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
Rewards in excess of Rs.10,000/-
Head of Department but not exceeding Rs. One lac
Additional Collector and
Senior most Deputy Collector/ Dy. Collector all the Hqrs.
Rewards in excess of Rs.1 Lac
Head of Department and upto Rs.5 Lacs
Director, Preventive Operations and
Additional Collector/ Special Director in charge of the Hqrs.
Reward in excess of Rs.5 Lacs
Concerned Member of the C.B.E.C. or G.C.A. as the Case may and
DGRI/Director, Enforcement/ Director, Anti-Evasion as the case may be, and
Head of Department concerned."
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.
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 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.
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.
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.
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.