The Delhi High Court dismissed the Writ filed seeking the Full Reward to the Petitioner, SC Gupta as the Informer’s Rewards Under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 qualified as an Ex-Gratia Payments.
According to the Current Facts of the case the Petitioner, S.C Gupta claimed that he had furnished essential information regarding the excessive sale of non-duty paid by a company, leading to the clandestine removal of goods without the payment of duty.
This critical information on tax evasion directly facilitated the recovery of unpaid dues by the Respondents. He asserted his entitlement to the full reward specified under the relevant guidelines and sought a writ of mandamus compelling the Respondents to disburse the claimed reward in its entirety.
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Based on the information provided, a show cause notice (SCN) was said to be issued to the company and its officials, raising a demand of INR 23.89 crores. For which the defaulting company availed the benefit of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, and settled the matter with the Respondents by paying 50% of the duty demand, which was INR 11.94 Crores.
The Petitioner’s entitlement to a reward based on the recovery of unpaid duty arising from his disclosure was acknowledged but only 2% of the claimed reward was disbursed i.e, INR 25 lakhs.
The Petitioner contended that the reward amount disbursed was inadequate and contrary to the terms outlined in the guidelines. He stated that since the duty evasion by the Company was uncovered solely based on the information he provided, he has the legitimate expectation of receiving the full reward of 20% as specified. For supporting his claim, he placed reliance on the revised Guidelines for grant of Reward to Informers and Government Servants specifically invoking Clause 5.1.1.
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The Petitioner also contended that the Respondents decision to disperse only a fraction of the claimed reward is violative of Article 14 of the Indian Constitution. The Petitioner represented by Mr. Dushyant K. Mahant and Mr. Vimlesh Kumar, Advocates in reliance with the decision of M.K. Govindapillai v. Secretary, Central Board of Ex. & C.2 argued that he should have been provided with reasonable opportunity for a personal hearing.
Also the Respondent ought not to have made the decision without providing a reasonable opportunity to the petitioner, which is the violation of the Principles of Natural Justice. He emphasized that such hearing would have been essential to enable him to present the case for seeking full reward as per established guidelines.
The Court by considering the Petitioner’s argument observed that it is a settled principle that rewards under Informer Schemes are ex-gratia payments and rewards of this nature cannot be claimed as a matter of right, as they are subject to the discretion of the Competent authority to decide as per guidelines. SC in Union of India v. R. Padmanabhan3 emphasized the same.
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The Petitioner argued that the Respondent authorities should have awarded him 20% of the recovered duty, amounting to INR 11.94 crores, based on the information he provided. However, this argument overlooks the principle mentioned within the guidelines which specifies that rewards should not be viewed as routine or formulaic entitlements. Also according to Clause 5.1.1 of the Guidelines states that a maximum limit rather than a guaranteed reward of 20 percent, making clear that the authority has discretion in determining the appropriate reward within this limit.
Clause 3.3.1 of the guidelines mandates that reward determinations are to be case-specific, factoring in the informer’s role within the broader context of each operation
Under Clause 3.3.1 of the Guidelines, an informant’s eligibility for a reward is not a routine entitlement but is instead based on comprehensive assessment of the informer’s role and the specific circumstances of each case.
A critical factor in this determination is whether the information helped identify principal offenders—such as organizers, financiers, or key associates involved in the scheme. The informer’s contribution is viewed in higher regard if it exposes individuals central to the evasion network, thus enhancing the impact of the enforcement action.
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So in the view of the above, it was concluded that the Petitioner’s claim of reward of 20% is not a matter of right which can be sought by invoking the Courts writ jurisdiction under Article 226 of the Constitution. In this regard, reliance was placed on the judgment of SC in Union of India v. R. Padmanabhan4 and Union of India and Ors. v. C. Krishna Reddy5.
In Dibyendu Roy Chowdhury v. Union of India, the High Court of Calcutta held that Article 226 of the Constitution of India cannot extend in deciding the factual nuances or quantifying contributions in monetary terms.
Justice Sanjeev Narula observed that the Petitioner has already been awarded INR 25 lakhs by the Respondents. The appropriateness of this quantum of reward cannot be adjudicated by this Court in proceedings under Article 226 of the Constitution, since it involves substantial determinations as to how and to what extent was the information useful in apprehending the duty evasion and the key players in this regard.
It was noted that, while the information provided by the Petitioner was useful in determining that there had been an evasion of duty by the company, the matter was eventually settled between the Respondents and the defaulting company under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. Therefore, it was concluded that there was no evidence on record to suggest that the discretion exercised by the Respondents was manifestly arbitrary.
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Lastly, the Petitioners contention that he was entitled to a personal hearing before the authorities, before the determination of reward, is misconceived. The court stated that there is no such procedural requirement as the reward scheme is discretionary and ex-gratia, the competent authority is not bound to give personal hearing.
In light of which the court held that it does not find any reason to interfere with the decision of Respondents, so accordingly the writ petition was dismissed by the court along with pending applications.
The Respondent was represented by Mr. Vijay Joshi, Mr. Rishesh Mani Tripathi and Mr. Shubham Chaturvedi, Advocates for R-1. Ms. Anushkaa Arora, SPC with Ms. Saumya Kapoor, GP for R-1.
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