Skip to content


Motilal Kishangopal Thanvi Vs. Union of India and Others - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberSuit No. 2994 of 1997
Judge
Reported in2000(2)BomCR869; (2000)1BOMLR592; 2000(3)MhLj483
ActsIncome Tax Act, 1961; Contract Act, 1872 - Sections 10
AppellantMotilal Kishangopal Thanvi
RespondentUnion of India and Others
Appellant AdvocateMotilal Kishangopal Thanvi, Adv.
Respondent AdvocateS.R. Rajguru, Adv.
Excerpt:
(a) guidelines framed by income tax department for grant of reward - guideline no. 6 - reward - payment of - an ex gratia payment - discretionary power of competent authority - suit for recovery of reward - court has no power to enforce.;guideline 6 of these guidelines, in categorical terms, lays down that payment of reward is ex-gratia payment and it is in the absolute discretion of the competent authority. it clearly means that the guideline does not create a right in the informant to receive any reward from the department. grant of reward, if any, is in the absolute discretion of the department. from guideline no. 6 it is clear that no right to receive any reward can be enforced by any court of law. ;(b) guidelines framed by income tax department for grant of reward - not framed under..........prove that the amount held to be payable at the discretion of the competent authority under the reward guidelines 1987 has been paid to the plaintiff?'3. perusal of the issues shows that issue no. 4 is in the nature of a preliminary objection to the maintainability of the suit. it is the case of the defendants that the plaintiff has no locus to file this suit. in my opinion therefore it would be appropriate to take up issue no. 4 for consideration first. the defendants have produced on record the guidelines, which were framed by income-tax department governing grant of rewards to informants in 1987. the plaintiff had given the information in the year 1988. guideline 1.2 of the guidelines lays down that rewards to informants, who has given information after 1st december, 1987 would be.....
Judgment:
ORDER

D.K. Deshmukh, J.

1. The plaintiff has filed the present suit for a decree in an amount of Rs. 14,25,000/- together with costs. It is the case of the plaintiff that on 10th May 1988 and 11th May 1988 he had submitted certain information to defendant No. 2, the Director of Inspection, Income-tax Department that there was evation of Income-tax and illegal transaction by four shop owners whose names are mentioned in paragraph 3 of the plaint. The plaintiff claims that pursuant to the information given by him raid was conducted by defendant No. 2. As a result of that raid material worth Rs. 3 crore were seized. According to the plaintiff, he is entitled to receive 10% of the amount of Income-tax charged by the Department pursuant to the information supplied by the plaintiff. According to the plaintiff, he is entitled to an amount of Rs. 15 lac as reward. The plaintiff submitted that he has been paid only an amount of Rs. 75,000/- and therefore, he is entitled to a decree in a sum of Rs. 14,25,000/-.

2. The suit is resisted by defendant Nos. 1, 2 and 3. According to the defendants, this suit is not maintainable because, grant of reward under the guidelines framed for that purpose by the Department is in the discretion of the authorities and getting a reward is not a matter of right which can be enforced by a Court of law. According to defendant Nos. 1, 2 and 3 an amount of Rs. 24,000/- was given as interim reward to the plaintiff. Thereafter, the amount of reward was worked out as Rs. 75,000/- and the balance amount was paid. The defendants have also claimed that the plaintiff had not given any specific information as required by the guidelines which can be said to have resulted in recovery of the Income-tax. On the basis of the rival pleadings, this Court framed following issues, which read as follows:

'1. Whether the plaintiff proves that he is entitled under the Income-tax Act to receive 10% of amount collected on account of the information furnished by him?

2. Whether the plaintiff proves that he is entitled to recover Rs. 14,25,000/-from the Income-tax Department?

3. Whether the plaintiff having received Rs. 75,000/- as per the final reward is entitled to claim any amount under the present suit?

4. Whether the defendants No. 1 to 3 prove that the plaintiff has no locus standi to file the suit?

5. Whether the defendants prove that the amount held to be payable at the discretion of the competent authority under the Reward Guidelines 1987 has been paid to the plaintiff?'

3. Perusal of the issues shows that issue No. 4 is in the nature of a preliminary objection to the maintainability of the suit. It is the case of the defendants that the plaintiff has no locus to file this suit. In my opinion therefore it would be appropriate to take up issue No. 4 for consideration first. The defendants have produced on record the guidelines, which were framed by Income-tax Department governing grant of rewards to informants in 1987. The plaintiff had given the information in the year 1988. Guideline 1.2 of the guidelines lays down that rewards to informants, who has given information after 1st December, 1987 would be governed by these guidelines. These guidelines are in the nature of executive instructions issued by the Income-tax Department. Guidelines No. 6 of these guidelines has been relied on by the defendants which reads as follows:

'6. Nature of reward and prohibition for entertainment of representations.---Reward in accordance with these guidelines will be an ex-gratia payment which, subject to these guidelines will be granted in the absolute discretion of the authority competent to grant rewards. No representation or petition against any decision regarding grant of rewards will be entertained from either the informant or any person on his behalf.'

4. The guidelines being in the nature of executive instructions, they are not per se enforceable by the Court. However, they can be treated as an agreement between the department and the person who is giving the information. Guideline 6 of these guidelines in categorical terms lays down that payment of reward is ex-gratia payment and it is in the absolute discretion of the competent authority. It clearly means that the guideline does not create a right in the informant to receive any reward from the department. Grant of reward, if any, is in the absolute discretion of the department. From Guideline No. 6 it is clear that no right to receive any reward can be enforced by any Court of law. In my opinion, therefore, the defendants are justified in saying that the plaintiff has no locus to file this suit in the sense that he does not have any right which can be enforced by a decree of this Court. Issue No. 4 is therefore, answered in the affirmative.

5. So far as Issue Nos. 1 to 3 and 5 are concerned in view of the finding recorded on Issue No. 4 above, these issues really do not survive for consideration.

6. Issue No. 1 is whether the plaintiff proves that he is entitled under the Income-tax Act to receive 10% of amount collected on account of the information furnished by him. It is obvious that the guidelines have not been framed under the Income-tax Act in the sense that they are statutory in nature. Therefore, there is no provision in the Income-tax Act or the Rules framed thereunder which entitles the plaintiff to 10% of the amount. Therefore, Issue No. 1 is answered accordingly. So far as Issue No. 2 is concerned, as I have held while considering Issue No. 4 that grant of reward is in theabsolute discretion of the department, it cannot be said that the plaintiff is entitled to receive any amounts from the department. Issue No. 2 is therefore answered accordingly. So far as Issue No. 3 is concerned, it is the case of the defendants that final amount of reward is fixed at Rs. 75,000/-. An amount of Rs. 24,000/- was paid as interim reward and thereafter the balance amount was paid. The plaintiff therefore is not entitled to receive any more amount from the defendants. So far as Issue No. 5 is concerned even according to the plaintiff, he has received an amount of Rs. 75,000/- as reward. I have held that what amount of the reward is to be paid is in the absolute discretion of the department. The department has fixed the amount at Rs. 75,000/- and it has been paid to the plaintiff. The plaintiff has accepted the same. In para 6 of the plaint the plaintiff has himself stated that he has been paid an amount of Rs. 75,000/-. Therefore, issue No. 5 is answered accordingly.

7. In view of the answers to the issues above, the suit fails and is dismissed with costs.

8. Suit dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //