IN THE HIGH COURT OF DELHI AT NEW DELHI

EXTRA ORDINARY CIVIL WRIT JURISDICTION

WRIT PETITION (CIVIL) NO. OF 2019

IN THE MATTER OF:

1. Mr. XYZ
. . . . Petitioner

VERSUS

1. Union of India
Ministry of Finance,
Department of Revenue
Custom and Central Excise Settlemet Commission,
North Block
New Delhi : 110001

2. Directorate General of Goods and Service Tax

Intelligence
West Block-VIII,
Wing VI, IInd Floor,
R.K Puram
New Delhi : 110001 . . . Respondents

WRIT PETITION UNDER ARTICLE 227 AND 226 OF THE

CONSTITUTION OF INDIA FOR ISSUANCE OF WRIT,
ORDER OR DIRECTION IN THE NATURE OF MANDAMUS
AND/OR ANY APPROPRIATE WRIT, ORDER OR
DIRECTION FOR THE PURPOSE OF DIRECTING THE
RESPONDENT NO.1 AND 2 DIRECTING THE
RESPONDENTS TO FORTHWITH, WITHDRAW, MODIFY
AND/OR CANCEL THE IMPUGNED DECISION DATED
02.03.2016.
MOST RESPECTFULLY SHOWETH:

1. Brief Introduction and Array Of Parties.

1.1 The Petitioner being aggrieved is filing the present

Writ Petition under Article 227 and 226 of the

Constitution of India for issuance of writ, order or

direction declaring that the decision of the

Respondent No.1 and 2 was purely arbitrary in

nature and without following the guidelines as

well as Broad Parameters to be kept in mind while

granting the reward.

1.2 That the Petitioner being aggrieved, is further, by

virtue of the present Writ Petition under Article 226

& 227 of The Constitution of India, seeking

issuance of Writ, order or direction in the nature of

Certiorari or any other Writ for the purpose of

quashing order or direction calling for the papers

leading to the passing of the impugned decision

dated 02.03.2016 under and after examining the

validity, legality and propriety thereof, be pleased

to quash and set aside the same.

1.3 That the identity of the petitioner is not disclosed in

present writ petition as being the Government

 Informer. Moresover, the petitioner gave the

information to Respondent for evasion of the Tax

and as according to the information, the evasion

was done in an organized manner and the tax

evasion worth more than crores were found.

1.4 That the respondent No. 1 Ministry of Defence has

laid down the policy for grant of rewards to the

informants and Government servants for any

seizures made or evasion of duty detection under

any of the provisions of the Customs Act,1962,

Central Excise and Salt Act, 1944 and Gold Control

Act, 1968, (now repealed as Foreign Exchange

Regulation Act, 1963), considering the risk

involved and also keeping in mind the

preparedness required in dealing with the

antisocial elements, the policy was laid down on

30.3.1985 and later on amended as grant of reward

to informers and the Government Servants , 2015 or

2017.

1.5 That the Respondent No. 1 is Ministry of Defence,

Government of India, is said to have provided for

incentives to informers - furnishing secret

information to the Customs officials in respect of

the activity of smuggling of contraband, along the

 shores of the country. A primary feature of this

arrangement was that the identity of the informer

would not be known except to a single officer of

the Department, through whom such secret

information would be conveyed. And that the

name of the informer would not be revealed in the

official records. This was to protect the informer

from retaliation by persons who would be affected

and also to ensure that his utility as an informer

was not put to an end by exposing his identity.

2. The brief conspectus of the present case which is necessary

for indispensible adjudication f the present writ petition is:

2.1 That the information was given by the petitioner to the

officials of Respondent.that the proprietor firm namely

M/s Lok Nath Prasad Gupta is manufacturer of

product namely "Raja & Champian" brands of

Chewing Tobacco(the product known as khaini) were

indulged in large scale evasion of Central Excise duty

by way of suppression of production of Khaini by not

showing the weight of water mixed during the

manufacture in records and clandestine removals of the

same without payment of duty.

2.2 That in pursuant to the information provided by the

petitioner the officials of Respondent on 31.05.2005

conducted raids/ searches at the factories, officers

premises of dealer, the transporters, raw materials

suppliers residences of key persons etc.

2.3 That as result of the search carried by the officials of the

Respondent apart from the cash, various incriminating

documents, unaccounted stock of finished goods raw

material etc were seized from different locations.

2.4 That subsequent to the investigation and seizure the

officials of the Respondent No. ..issued show cause

notice dated 26.05.2006 demanding consolidated duty

of Rs. 105,37,71,452/-. Furthermore, the show cause

notice also invoked the penal previsions under Rule 26

of Central Excise Rules 2001/2002.

2.5 That as according to the provisions of law the matter

came up for the admission of the tax Liability on

15.02.2007 before the Customs and Central Excise

settlement Commission. Furthermore, Rs.

10,00,00,000/- were deposited by M/s Lok Nath.

Moreover, the application under section 32E of Central

Excise Act, 1944 was filed for the settlement and further

Rs. 8,26,81,905/- were deposited by M/s Lok Nath and

thereafter the case was admitted on 06.03.2007 by the

 Customs and Central Excise settlement Commission

(Principal Bench).

2.6 That the officials of the Respondent No. ... after careful

consideration of facts and circumstances of case as well

as nature of evidence on record, the Customs and

Central Excise settlement Commission(Principal bench)

was in opinion of that " the demand of the duty as

proposed in SCN is sustainable only to extent of Rs.

58,09,78,897/"-.

2.7 That Customs and Central Excise settlement

Commission (Principal Bench) on 29.02.2008passed the

final Order No. F-781-784/CE/08-SC(PB) also settled

the dispute and settle for an amount of Rs.

57,43,83,420/ -as well the bench imposed the interest at

the rate(s) applicable during said period for the duty

evaded with effect from 1st April of the financial year

and the bench directed the Respondent No. .... to

calculate the interest and to inform the same too tax

invader. Furthermore, the bench also imposed the

penalty in the tune of

Rs. 40,00,00,000/- (Rs. Forty Crore). It is also

worthwhile to bring in the knowledge of this Hon'ble

Court that the bench also while releasing the seized

 item imposed the fine on confiscation of goods in tune

of Rs. 13,20,792/- .

2.8 That it is not in dispute that the information furnished

by the petitioner resulted in the discovery of evasion of

duty by the company and a claim for payment of a

reward to the former in terms of the reward

rules/policy framed by the Government. That the

reward of the petitioner was sanctioned by the

respondent No. .... vide Informer Sanction Order No.

41/2015-2016 dated 02.03.2016. Moresover, as

according to the sanction order the petitioner was

awarded meager amount by the respondent.

2.9 That being unsatisfied by the award sanctioned by the

Respondent the petitioner made numerous

representations to the respondent for the enhancement

of reward as the award sanctioned by the Respondent

No. 1 is totally arbitrary in nature and also by not

complying the scheme and policy dated 30.03.1985

framed by the by the Respondent No. 1.

2.10 That the petitioner also preferred several RTI

applications in different states of India and is also

relying upon the responses submitted by the Central

 Excise Authorities, in response to the queries made

under the Right to Information Act, 2005 (RTI).

2.11 That being unsatisfied with reward the petitioner filed

an appeal in this regard before the Respondent No. and

as accordingly the appeal was affixed for hearing

however, the respondent No. 2 failed to provide the

satisfactory answer to the petitioner, in such restraint

circumstances wherein the respondents have failed to

comply with the Policy and scheme framed by the

Respondent No.1, petitioner being aggrieved from said

acts is preferring present writ against the respondents.

GROUNDS

I. Because the acts and conduct of the Respondents are

purely arbitrary and capricious in nature without

considering the Policy and Scheme as well as the

various opinion formed by the various Courts while

granting the reward.

II. Because the respondents failed to appreciate that the

rewards are 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.

III. Because the Respondent failed to appreciate that the

Apex Court in "Union Of India vs R. Padmanabhan"

on 13 August, 2003 " the Division bench while deciding

on similar circumstances, held that reward under the

Scheme was a purely ex gratia payment though the

same could not be arbitrarily denied or refused. " The

Court observed:

"The rewards are also to be and can be "up to 20%" or as the case may
be and not that invariably it must be as a rule 20% of the estimated
market value. The 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 be 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. Moreover, 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 that
regard in the Scheme itself."

IV. Because the decision of the Respondents is inter-alia

unreasonable, arbitrary, unjustified and

 unconstitutional, as the same is causing grave prejudice

to the petitioner.

V. Because inter-alia due to the unjust prejudice and

harassment has been caused to the petitioner and the

Respondents without any application of mind and in

highly unjust, arbitrary and unconstitutional manner

did not consider the representations of the petitioner

and denied to enhance the reward.

VI. Because Respondent failed to appreciate the relevant

provisions of the guidelines issued by the Government

of India in the Guidelines for grant of reward to

informers and the Government Servants , 2015 or 2017

regarding the policy, procedure and orders in respect of

grant of rewards to informers and Government

servants in case of seizure made and evasion of duty

etc. detected under the provisions of the Customs Act,

Central Excise and Salt Act, 1962, Gold Control Act

and Foreign Exchange Regulation Act . Moresover, as

per the para No. 7.1. of the guidelines "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 reward which may

begranted, the authority competent to grant reward will keep

 in mind the 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 associates etc., the

risk involved for the Govt. servants in working out the case,

the difficulty in securing the information, the extent to which

the vigilance of the staff led to the seizure, 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 approached or not."

VII. Because Respondent failed to appreciate the Guidelines

for grant of reward to informers and the Government

Servants , 2015 or 2017 that the PAYMENT OF FINAL

REWARD which is extracted in para 7.1 and same is

reproduced hereunder "Final rewards, both to officers as

well as informers, should be sanctioned and disbursed only

after conclusion of adjudication/appeal /revision proceedings.

The final reward will be determined on the basis of the net

sale proceeds of goods seized/confiscated (if any) and/or the

amount of additional duty/fraudulently claimed Drawback

recovered plus penalty/fine recovered, and the total reward

admissible, i.e., advance and final reward put together, will

not exceed the ceiling of 20% of the net Page 2515 sale
 proceeds (if any) plus amount of additional duty/fine/ penalty

recovered or the amount of drawback fraudulently claimed

recovered, as the case may be. This will be subject to

instructions in para 4.3. above as regards rewards to Govt.

Servants is concerned. The advance/interim reward

sanctioned and disbursed, if any, shall be adjusted from the

final reward to be paid to the officers/informers."

VIII. Because the Petitioner craves leave of this Hon’ble

Court to submit other grounds at the time of hearing of

the instant Writ Petition. It is submitted that due to the

extreme urgency, certain other material points would

have been inadvertently missed by the Petitioners

herein and that the same may be incorporated at alter

stage.

NON FILING PARA'S

1. That the Petitioner has not filed any such writ petition previously

either before this Hon’ble court or Hon’ble Supreme court.

2. That there is no other efficacious, alternative and speedy remedy

available with the Petitioner except to approach this Hon’ble High

Court under Article 226 & 227 of the Constitution of India.

PRAYER
In view of the facts and grounds stated herein above the

Petitioner herein prays that this Hon’ble Court may be pleased

to:-

a. Issue appropriate Writ, Order or Direction, thereby directing

the Respondent No.1 and 2 to consider afresh the reward

awarded to the petitioner vide sanction order No ... dated....;

b. Issue appropriate Writ, Order or Direction, thereby directing

the Respondent No.1 and 2 to consider the Policy and

guidelines while considering the award in afresh;

c. Issue appropriate Writ, Order or Direction, thereby directing

the Respondent No.1 and 2 too consider the Percentage and

extent of reward, which can be awarded in case of principal

amount, i.e., customs duty and the penalty/fine amount

received by the respondent No. .. from company;

d. Pass any other order and/or direction, as this Hon’ble Court

may deem fit proper under the facts and circumstances of the

present case and in the interest of Justice.

Petitioner
Through