2011 (9) TMI 784 - HC - Customs

Grant of reward - informer - The Petitioner claims to be entitled to a reward representing 20% of the value of the goods confiscated and duty recovered. - Held that - 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 v. C. Krishna Reddy (2003 -TMI - 46829 - SUPREME COURT OF INDIA) - the case of the Petitioner has not even been considered by the Committee. 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 - Decided in favor of the petitioner by way of direction 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

Summary

Issues Involved:
1. Entitlement of the Petitioner to a reward.
2. Guidelines for granting rewards.
3. Jurisdiction of the High Court under Article 226.
4. Consideration of the Petitioner's claim by the Committee.

Issue-Wise Detailed Analysis:

1. Entitlement of the Petitioner to a Reward:
The Petitioner claims to be an informer who provided information to the Directorate of Revenue Intelligence (DRI) about the More Group of Companies' evasion of customs duty through under-invoicing and forged documents. The Petitioner asserts entitlement to a reward amounting to 20% of the value of the goods confiscated and duty recovered, citing the guidelines issued by the Union Government on 16 April 2004. The Petitioner addressed multiple letters and an Advocate's notice seeking this reward but received no response.

2. Guidelines for Granting Rewards:
The guidelines formulated by the Ministry of Finance, Department of Revenue, stipulate that rewards up to 20% of the net sale proceeds of contraband goods seized, or the amount of duty evaded plus the amount of fine or penalty levied and recovered, can be granted. Clause 5.1 of the Guidelines emphasizes that a reward is an ex-gratia payment, subject to the absolute discretion of the competent authority, and cannot be claimed as a matter of right. Factors for determining the reward include the specificity and accuracy of the information, the risk undertaken, and the extent of help rendered by the informer. Clause 6.1 allows for interim rewards in specific cases, while Clause 7.1 states that final rewards can only be sanctioned after the conclusion of adjudication/appeal/revision proceedings.

3. Jurisdiction of the High Court under Article 226:
The Supreme Court in Union of India v. C. Krishna Reddy held that the High Court in writ jurisdiction cannot examine or weigh the factors for granting a reward, as it is a matter within the domain of the Department's authorities. The High Court cannot issue a Writ of Mandamus directing the Government to pay a reward, as it is not a matter of right but an ex-gratia payment at the discretion of the competent authority.

4. Consideration of the Petitioner's Claim by the Committee:
The Petitioner contends that the authorities have recovered certain amounts based on the information provided and that the claim for a reward has not been considered by the Committee constituted under the Guidelines. The Respondents argue that the grant of rewards is not a matter of right and that the proceedings remanded by the CESTAT have not attained finality. The Court acknowledges that the Petitioner's claim should be evaluated by the Committee, noting that the Petitioner has continuously communicated with the authorities without receiving a reply. The Court directs that the Petitioner's claim be considered by the Committee in accordance with the relevant Guidelines.

Conclusion:
The High Court disposes of the Petition by directing the Rewards Committee to evaluate the Petitioner's claim for a reward in accordance with the relevant Guidelines. The Court clarifies that it has not expressed any view on the merits of the Petitioner's claim or the information provided. The Petition is disposed of with no order as to costs.