Santosh Singh Jain vs The Director General and Another

G.S. Sistani, J.

WP(C) No. 1604/2007.

The petitioner herein blew the whistle on certain unlawful evasive activities for which he was rewarded by the respondents. Dissatisfied by the quantum of the reward sanctioned by the respondents, the petitioner has filed the present petition under Article 226 of the Constitution of India, seeking the following relief:

a) To issue writ order or direction particularly in the nature of mandamus. Directing the respondents to grant reward amount to the petitioner for processing of balance reward of 47,19,214/- on Rs. 8,35,96,077/- as the Petitioner has already received a reward of amount of Rs. 1,20,00,000/- out of the reward of Rs. 1,67,19,214 @ 20% on the evaded central excise of Rs. 8,35,96,077/- and also for processing and payment of award on Rs. 6,1743,310/- @ eo% which comes out to Rs. 1,23,48,662/-.

b) Writ of certiorari against the respondents for setting aside the order dated 12.02.2007.

c) Direct the Respondents to Calculate the interest @ 10% on 14,53,39,387/- from the date when the said amount fell due against both assessee''s M/s Photo Film Industries, Pondicherry and M/s Foto Industries, Meghalaya and also process the award @ 20% as the Petitioner is entitled for reward on net recovery of the evaded and

d) Direct the Respondents to file an Affidavit as to why the Settlement Commissioner, Mumbai, has not been informed about the compliance of the final order dated 11.10.2005 of recovering of 10% interest on the said amount of 14,53,39,387/- from the date when it fell due and recovered and appraise this Hon''ble Court for the reason of the lapse.

Brief facts, as stated in the petition, are that the petitioner is a senior citizen. On 25.04.2003, the petitioner wrote a letter to the Director General, Anti Evasion Excise, Delhi, informing him that one Shri Sushil Gupta of Mumbai had been manipulating and conniving with the local excise officers of Pondicherry and Themmberwet, Meghalaya, to evade the Central Excise. It was complained by the petitioner through this letter that the said Shri Sushil Gupta was performing manufacturing operations to convert jumbo rolls to cinematographic films at M/S Photo Film Industries (PFI), Pondicherry where as records were being manipulated so as to show that the entire manufacturing was being carried out at M/S Foto Industries (FI), Themmberwet, Meghalaya, which was nothing but a fictitious unit. The petitioner also requested that the secrecy of the information be maintained as it was sensitive in nature and could endanger the life of the informer.

The grievance of the petitioner is that he has received a sum of Rs. 1,20,00,000/-, as reward, from Director General, Central Excise Intelligence but, his letter dated 29.11.2006 asking for review of the reward has been rejected by the respondents via. Letter dated 12.02.2007, and besides this, the respondents have also refused to refer the matter of the petitioner to the Central Board of Excise and Customs. The petitioner is primarily aggrieved by the letter dated 12.02.2007 sent by the respondents to the petitioner, and the same has been assailed before the Court.

It has been contended by learned Counsel for the petitioner that the respondents have not complied with the order of the Settlement Commission of Customs and Central Excise, Additional Branch, Mumbai, and, in case, that order had been complied with, not only would the respondents have recovered more amount but the petitioner would have also consequently received a reward amount greater than what he received. Counsel further submits that, in fact, for extraneous reasons, the respondents are not interested to comply with the order of the Settlement Commission and consequently are not recovering further excise and interest, which is due and payable, by the assessee to the respondents.

Learned Counsel for the petitioner has also drawn the attention of this Court to para 1 of the Counter Affidavit of the respondents, wherein the respondents have themselves stated that the assessee M/s PFI, Pondicherry, have already been told about the amount of interest of Rs. 99,82,249/- vide communication dated 27/28.09.2006 along with the direction to deposit the same within 30 days. Learned Counsel further submits that the petitioner could also be entitled to reward, on the amount of interest, which would accrue on the main amount recovered. Learned Counsel for the petitioner has relied upon the decision of a Division Bench of this Court in Amrit Lal Mehta v. D.G. of Revenue, Intelligence and Investigation reported at Amrit Lal Mehta Vs. Director General of Revenue Intellegence and Investigation and Others, ).

It is contended by learned Counsel for the respondents that the amount of reward has been paid to the petitioner on the basis of the amount which has been recovered. It is also contended by learned Counsel for the respondents that the petitioner cannot, in these proceedings, challenge the order of the settlement and it is also not open to the petitioner to raise the disputed question of facts with regard to the recoveries made. The respondent also contends that all the payments have been made to the petitioner, as per the guidelines issued by the Government of India, Ministry of Finance, Department of Revenue vide its notification bearing No. F. No. R-13011/6/2001-Cus(AS), dated 20.06.2001. To make good his point, learned Counsel for the respondents particularly relies upon Clauses 4.1, 4.2, 5.1, 7.1, 8.1, 9 and 13 of the notification.

I have heard both parties at length and given my thoughtful consideration to the matter.

The present petition has occasioned this Court to revisit the principled underlying the scope and extent of judicial review in administrative decisions and policy making. It is no longer res integra that the practice of judicial review of administrative action ordinarily constitutes the exceptional and not the rule. Reliance, in this regard, may be placed on the decision of this Court in Howlader Anukul Chandra v. Chairman cum Managing Director, ITDC Limited and Ors. reported at 2008 II AD (Delhi) 485. The relevant portions in the said decision are extracted thus:

In view thereof, it can be safely said that the reason of judicial review of administrative action, ordinarily, constitutes the exception and not the rule. Unless a policy decision is coloured in mala fide exercise of discretionary power or is demonstrably caprious or arbitrary and not informed by any reason otherwise purports to create an unreasonable classification, it cannot be a subject of judicial interference under Articles 32 or 226 of the Constitution of India. If a policy decision cannot be touched on any of these grounds, the mere fact that it may affect the interests of either party does not justify the Courts invalidating the said policy.

The exceptional circumstances warranting the application of judicial review in administrative matters were for the first time postulated by Lord Greene in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation reported at 1948 1 KB 223 famously remembered as "the Wednesbury Case". In the said case, the plaintiffs, who were the proprietors of a cinematograph theatre, had been granted license by the defendants, the Wednesbury Corporation, to operate their theatre on the condition that children under the age of fifteen would not be allowed entry into the theatre on Sundays. Counsel for the plaintiffs argued that the Wednesbury Corporation was not entitled to impose any such condition. It was further argued that if at all the Wednesbury Corporation was entitled to a condition prohibiting the admission of children, it should have limited it to cases where the children were not accompanied by their parents or a guardian or some adult. The thrust of the plaintiff''s argument thus was that the condition put by the defendants restricting the access of children below fifteen to the theatre on Sundays was unreasonable, and that, in consequence, it was ultra vires the power of the Wednesbury Corporation. Dismissing the claim of the plaintiffs, Lord Greene unequivocally opined that the Court could not intervene to overturn the decision of a local authority (the Wednesbury Corporation) simply because the Court disagreed with it. It was observed that to have the right to intervene, the Court would have to form the conclusion that:

(i) the corporation, in making that decision, took into account factors that ought not to have been taken into account, or

(ii) the corporation failed to take into account factors that ought to have been taken into account, or

(iii) the decision was so unreasonable that no reasonable would ever consider imposing it.

The aforesaid exceptional circumstances, as envisaged by Lord Greene in the Wednesbury Case, were nreasonable by Lord Diplock in Council of Civil Service Unions and Ors. v. Minister for the Civil Service ("the GCHQ case), under the following heads:

(i) Illegality;

(ii) Irrationality; and

(iii) Procedural Impropriety

The aforementioned principles, famously reckoned as the Wednesbury Principles, have stood the test of time by their consistent and extensive application by courts in reviewing administrative policies and decisions.

(Emphasis supplied)

The Supreme Court has held in the case of Ganesh Bank, Kurundwad Ltd. and Others Vs. The Union of India (UOI) and Others, , that "there should be judicial restraint while making judicial review in administrative matters. Where irrelevant aspects have been eschewed from consideration and no relevant aspect has been ignored and the administrative decisions have nexus with the facts on record, there is no scope for interference.... Administrative action is subject to control by judicial review in the following manner: (i) Illegality.- This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it. (ii) Irrationality, namely, Wednesbury unreasonableness. (iii) Procedural impropriety."

Reliance in the same vein may also be placed upon the case of Union of India and Others Vs. Lt. Gen. Rajendra Singh Kadyan and Another, cited by the DB of this Court in Major General Lakhwinder Singh Vs. Union of India (UOI) and Others, which very appropriately summed up the substance regarding the scope of judicial review in the following words, "[j]udicial review is permissible only to the extent of finding whether process in reaching decision has been observed correctly and the decision as such." As also emphasized in the case of Lakhwinder Singh (supra) there has to be an "element of arbitrariness or patent nreasonableness"

Coming back to the present petition, what has been contended before this Court by learned Counsel for the respondents is that the amount to be paid as a reward cannot be granted by the respondents to the informer as a matter of routine. The grant of reward is at the discretion of the concerned authority and cannot be claimed by anyone as a matter of right. Learned Counsel for the petitioner, however, submits that the respondents cannot flout the guidelines and cannot grant reward in an arbitrary and in a fanciful manner. While granting a reward, the respondents must comply with the set principles of law and the discretion is to be judiciously executed. On a complete reading of the guidelines, which are not in dispute, what emerges is that the informer would be eligible for a reward upto 20 per cent of the net-sale proceedings of the contraband goods seized and/or amount of duty evaded plus the amount of fine and penalty levied/imposed and recovered.

As per Clause 5.1 of the guidelines, the ''Reward'' is purely an ex-gratia payment, and 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 the trouble undertaken, the extent and nature of the help rendered by the informer.

As per Clause 9 of the guidelines, a review is maintainable against the final rewards sanctioned by the competent authority. Clause 9 reads as under:

REVIEW OF FINAL REWARDS SANCTIONED BY THE COMPETENT AUTHORITY

Final reward sanctioned by the duly constituted reward sanctioning authority/committee shall not be reviewed or reopened. However, in most exceptional cases, where DGRI, DGCEI, or the Chief Commissioner, as the case may be, is satisfied that the 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 and make a recommendation to the Board to this effect, the Govt. may review the final reward sanctioned on the specific recommendations of the Board.

The petitioner further contends that the respondents have admitted recovery of Rs. 14,53,39,387/-, which according to learned Counsel for the petitioner is based on a RTI enquiry made by the petitioner, which is at page 66 of the writ petition.

While dealing with the present petition, this Court has taken into consideration the review petition which has been filed by the petitioner and the impugned order dated 12.02.2007 passed by the respondents. For felicity of reference, the impugned order dated 12.02.2007 is reproduced thus:

Directorate General of Central Excise Intelligence

West Block No. 8, Wing No. 62nd floor

R.K. Puram, New Delhi.

F. No. 77/Int/DGCEI/Hq/03/221129 Date: February 12, 2007 To,

Ms. Sangeeta Kumar,

211, 2nd floor,

Supreme Court Lawyers'' Chambers (New Bld.),

6, Bhagwandas Road,

New Delhi.

Madam,

Subject: Reward in the case of M/s Photo Film Industries Ltd. Pondicherry & M/s Foto Industries, Meghalaya.

Please refer to your letter dated 29.11.06 on the above subject.

Investigations in the above mentioned case reveal that the excisable goods were being manufactured at M/s Photo Filsm Industries Ltd. (PFI), Pondicherry who did not pay any C. Excise duty. The goods were being fraudulently shown as manufactured at M/s Foto Industries (F1), Meghalaya, who used to pay excise duty and then claim refund under notification No. 32/99 and dated 8.7.99. M/s FI Meghalaya had paid Rs. 6,69,96,830/- as duty during the period April, 2002 to April, 2003 and had claimed the refund of Rs. 6,10,60,927. The refund of balance amount of Rs. 59,35,903 was pending with the department.

A show cause notice was issued to PFI, Pondicherry demanding duty of Rs. 8,35,96,077 on the ground that all the excisable goods shown to have been cleared from FI Meghalaya were actually manufactured at PFI, Pondicherry. The amount of Rs. 6,10,60,927/- already refunded to FI, Meghalaya was sought to be recovered and the total duty of Rs. 6,69,96,380/- paid by FI, Meghalaya was proposed to be adjusted against the above mentioned duty liability of Rs. 8,35,96,077/-. Both PFI and FI went to the Settlement Commissioner and the Settlement Commission vide its interim order dated 27.10.04 allowed the adjustment of duty paid by FI, Meghalaya against the duty liability of PFI, Pondicherry. Later, the Settlement Commission vide its final order dated 11.10.05 settled the duty liability against PFI Pondicherry at Rs. 8,35,96,077. This amount has since been recovered from FI Meghalaya and PFI, Pondicherry.

Thus, it is incorrect to suggest that the Department has recovered Rs. 14,53,39,387/- in the above mentioned case. The department has in effect recovered only Rs. 8,35,96,077 from M/s PFI which is the excise duty on goods actually manufactured at Pondicherry. No duty has been charged from FI, Meghalaya as no goods were manufactured there.

The reward amount has been sanctioned by the reward committee taking into account all factors including actual revenue realized by the Department in the instant case.

In view of the same, it has been decided that there is no justification for referring the matter to the Central Board of Excise and Customs for reconsideration of the reward amount. This issue with the approval of the Director General, DGCEI.

Yours faithfully,

(Navneet Goel)

Additional Director.

In the aforesaid impugned order dated 12.02.2007, it is categorically stated that the respondents have issued "[a] Show Cause notice to PFI, Pondicherry demanding duty of Rs. 8,35,96,077/- on the ground that all the excisable goods shown to have been cleared from FI Meghalaya were actually manufactured at PFI, Pondicherry". In fact, in paragraph 4 of the reply, the Additional Director, has downrightly stated that "it is incorrect to suggest that the Department has recovered Rs. 14,53,39,387/- in the above mentioned case. The department has in effect recovered only Rs. 8,35,96,077 from M/s PFI which is the excise duty on goods actually manufactured at Pondicherry. No duty has been charged from FI, Meghalaya as no goods were manufactured there".

In my view, the review of the petition has been ably dealt with by the Additional Director in her order dated 12.02.2007. Apropos of the case of Amrit Lal Mehta v. D.G. of Revenue Intelligence and Investigation (supra), cited by the petitioner to canvass that a writ of Mandamus would be maintainable, I am afraid that the decision in the said case is distinguishable on facts. In the said case, although the amounts had been recovered by the Department at the instance of the information provided, yet no reward was paid to the petitioner at all. And thus in these circumstances a writ of Mandamus was passed by the Court directing the Department to reward the informant appropriately. The facts of the case hereinbefore us differ inasmuch as the petitioner has already been rewarded by the respondents in tandem with the amount recovered and the applicable guidelines.

Taking into consideration the facts of this case where the communication by the respondents dated 12.02.2007 has categorically denied recovery of Rs. 14,53,39,387/-, and when in the reply to the RTI enquiry, the Central Public Information Officer has again stated that the order of the Settlement Commission has been complied with, this Court cannot interfere with the findings of the review in the impugned order dated 12.02.2007.

Moreover, it is trite that the writ of Mandamus can only be granted in a case where there is a statutory duty imposed on the officers concerned and there is failure on the part of that officer to discharge the statutory obligations see, Union of India (UOI) and Others Vs. C. Krishna Reddy, . In the case in hand, there does not seem to be violation of any statutory duty, by the respondents.

In view of what is stated above, no grounds made out. Petition stands dismissed.