Santosh Singh Jain vs The Director General & Another
2008 Latest Caselaw 918 Del

          IN THE HIGH COURT OF DELHI AT NEW DELHI

                          WP(C)No.1604/2007.



#      Santosh Singh Jain                             ..... Petitioner.
                                  Through :     Ms. Sangeeta Kumar,
                                                Advocate.



                                  VERSUS



$      The Director General & Anr.                    ..... Respondents.
^                             Through :         Mr. Mukesh Anand and
                                                Mr. Sahilesh Tiwary,
                                                Advocates.

CORAM:
     HON'BLE MR. JUSTICE G.S.SISTANI
       1.Whether reporters of local papers may be allowed to see
         the Judgment ? Yes
       2.To be referred to the Reporter or not?        Yes
       3.Whether the judgment should be reported in the Digest?
       Yes


                                  ORDER

03.07.2008

G.S.SISTANI, J. (ORAL) + WP(C)No.1604/2007.

*

1. 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

WP(C)No.1604/2007 Pages 1 of 12 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.

2. 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

WP(C)No.1604/2007 Pages 2 of 12 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.

3. 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.

4. 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.

5. Learned counsel for the petitioner has also drawn the attention of

this Court to para 1 of the Counter Affidavit of the respondents,

WP(C)No.1604/2007 Pages 3 of 12 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 204 (178) ELT 99 (Del.).

6. 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.

7. I have heard both parties at length and given my thoughtful

consideration to the matter.

8. 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

WP(C)No.1604/2007 Pages 4 of 12 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 others, reported at 2008 II AD

(Delhi) 485. The relevant portions in the said decision are

extracted thus:

"13. 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.

14. 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. Vs. 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

WP(C)No.1604/2007 Pages 5 of 12 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.#

15. The aforesaid exceptional circumstances, as envisaged by Lord Greene in the Wednesbury Case9, were nreasonable by Lord Diplock in Council of Civil Service Unions and Others Vs. Minister for the Civil Service ("the GCHQ case)10, under the following heads:

(i)Illegality;

(ii)Irrationality; and

(iii)Procedural Impropriety

16. 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)

10. The Supreme Court has held in the case of Ganesh Bank of

Kurundwad Ltd. Vs. Union of India, reported at (2006) 10 SCC

645, 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

WP(C)No.1604/2007 Pages 6 of 12 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."

11. Reliance in the same vein may also be placed upon the case of

Union of India and others Vs. Lt. General Rajendra Singh

Kadyan and another reported at AIR 2000 SC 2513 cited by the

DB of this Court in Lakhwinder Singh v. Union of India reported

at 2007 (95) DRJ 706 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"

12. 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

WP(C)No.1604/2007 Pages 7 of 12 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.

13. 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.

14. 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:-

"9. 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.

15. The petitioner further contends that the respondents have

admitted recovery of Rs.14,53,39,387/-, which according to learned

WP(C)No.1604/2007 Pages 8 of 12 counsel for the petitioner is based on a RTI enquiry made by the

petitioner, which is at page 66 of the writ petition.

16. 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.

2. 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.

3. 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

WP(C)No.1604/2007 Pages 9 of 12 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.

4. 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.

5. 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.

6. 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."

17. 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.

WP(C)No.1604/2007 Pages 10 of 12 No duty has been charged from FI, Meghalaya as no goods were

manufactured there".

18. 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 Vs. 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.

19. 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.

20. 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 Vs. C.

Krishna Reddy, 2004 (163) E.L.T. 4 (SC)). In the case in hand,

WP(C)No.1604/2007 Pages 11 of 12 there does not seem to be violation of any statutory duty, by the

respondents.

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

stands dismissed.

G.S. SISTANI, J.

July 03, 2008
„msr‟




WP(C)No.1604/2007                                       Pages 12 of 12