Rannu Devi & Anr vs. Sandeep Kumar & Ors

Facts

The petitioners, Rannu Devi & Anr., filed a contempt petition alleging willful disobedience of a High Court order dated July 16, 2019, which directed the respondents to disburse a reward to the petitioners within two months as per policy and to communicate the status of an appeal before the CESTAT. The petitioners had previously filed a writ petition seeking reward as informers for tax evasion by M/s J.V. Industries Pvt. Ltd. A prior judgment on May 27, 2014, had allowed their claim for reward, stating it could not be brushed aside and left it to the authorities' discretion to pass appropriate orders regarding interim reward, to be communicated within four weeks. The present contempt petition was filed as the reward was not paid. The respondents argued that final reward disbursement is contingent upon the conclusion of adjudication and appeal proceedings against the assessee-company, which are still ongoing.

Held

The Court held that there was no willful and deliberate disobedience of the order dated July 16, 2019, by the respondents. The Court referred to the respondents' Reward Scheme, which clearly states that final rewards should be sanctioned and disbursed only after the conclusion of adjudication/appeal/revision proceedings and closure of other related matters. The Court noted that the assessee-company's writ petition concerning further demands is still pending adjudication. Therefore, the proceedings against the assessee-company cannot be considered closed. The Court also took note of the respondents' submission that they cannot go beyond their Scheme and have no discretion to release reward amounts before the finalization of proceedings against the assessee-company. Consequently, the contempt petition was closed, and the notice of contempt against the respondents was discharged. Liberty was granted to the petitioners to approach the respondents for the release of the interim reward of ₹5 Lacs and to revive the contempt petition if there is non-compliance after the finalization of the assessee-company's proceedings.

Key Issues

1. Whether the respondents have willfully disobeyed the order dated July 16, 2019, passed in W.P.(C) No. 7560/2019, by failing to disburse the reward to the petitioners and communicate the status of the appeal before the CESTAT? The petitioners argued that the respondents have willfully disobeyed the court's order by not disbursing the reward. They contended that the assessee-company had not disputed its complete liability, allowing for the release of the full reward amount even at this stage. They relied on the previous judgment that stated the petitioners' claim could not be brushed aside. The respondents argued that the final reward can only be sanctioned and disbursed after the conclusion of adjudication/appeal proceedings and closure of related matters, as per their Reward Policy. They pointed out that the assessee-company's appeal and other related proceedings are still pending before the learned Division Bench, and therefore, the conditions for final reward disbursement have not been met. They also noted that an interim reward of ₹5 Lacs has been sanctioned but not collected by the petitioners.