Isabella Mariam

The High Court of Bombay Division Bench of Justice M.S. Sonak and Justice Jitendra Jain directed the State of Maharashtra and its authorities to pay a reward amount of Rs. 19,44,802 to the petitioner within six weeks, with a stipulation of interest at 8% per annum in case of delay. The directive followed years of litigation initiated by the petitioner for non-payment of reward for providing critical information leading to substantial tax recoveries from public sector oil companies. The Court made it clear that the determined reward was legally due under the Government Circular and subsequent resolutions governing rewards for informants.

The Court rejected the belated procedural objections raised by the State and held that non-payment of the admitted amount was unjustified. It stated that once the authorities themselves had assessed the reward due, there could be no lawful justification to withhold payment. The Court directed that the interest liability for any delay in disbursing the sum shall be recoverable from erring officials. Furthermore, it instructed the Sales Tax Commissioner and Finance Secretary to make a final determination of the total reward payable to the petitioner within six months.

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The petitioner, aged 64 at the time of filing the writ petition in 2013, sought a writ under Article 226 of the Constitution directing the respondents to pay him a reward for information he provided to the Sales Tax Department from 1992 onwards. The said information reportedly led to substantial sales tax recoveries from tax evaders, particularly involving public sector oil companies and certain Fishermen Co-operative Societies.

According to the petitioner, he had been submitting actionable intelligence regarding tax evasion since 1992. In 1996, he disclosed an alleged scheme involving Public Sector Oil Companies and Co-operative Societies to avoid tax, which, according to him, caused significant revenue loss. Despite his repeated submissions, the State took no immediate action. Consequently, the petitioner filed Public Interest Litigation No. 139 of 2006 seeking action on his disclosures.

The PIL was disposed of on 21 November 2007 after affidavits were filed by the CBI and the State Finance Department detailing action taken, including arrests and charge-sheets. The Court granted the petitioner liberty to pursue his claim for reward separately.

Despite this, the petitioner’s efforts to secure the reward amount did not meet success. He claimed the respondents consistently failed to provide him with specific information regarding the recoveries made based on his complaints. He invoked the Right to Information Act, and based on the responses received, asserted that substantial recoveries had been made.

The petitioner relied on a Government Circular dated 01 January 1976 (Exhibit A) which governed the reward mechanism for informants. However, the respondents contended that this Circular was superseded by the Government Resolution dated 05 June 2007. The latter provided that rewards would only be paid after revenue was irrevocably realised.

An affidavit filed by Mr. Kishore Raje Nimbalkar, Joint Commissioner of Sales Tax, dated 21 September 2015, acknowledged that recoveries had been made. The affidavit disclosed that though the petitioner had claimed recovery of Rs. 361 crores, the department recorded Rs. 55.98 crores as total dues, with actual recovery pending due to appellate proceedings. It also clarified that a provisional entitlement was determined and communicated by letter dated 07 September 2015, subject to sanction by the State Government as the amount exceeded Rs. 5 lakhs.

The matter was repeatedly listed before different benches of the Bombay High Court. On 26 August 2014, the Court instructed the respondents to disclose steps taken for recovering dues. Further directions were issued on 28 October 2014, requiring affidavits explaining delays and steps proposed against erring officials. Subsequent hearings on 11 November and 18 November 2014 recorded the department’s assurance to complete recoveries by 31 March 2015.

On 20 January 2015, the Court remarked that if the petitioner was eligible, at least partial remuneration should be released. On 04 February 2015, the State was directed to take a decision on the petitioner’s request by 06 April 2015.

Despite these directions, the Court noted no payment had been made. A small interim amount of Rs. 75,000 was paid as per a government order dated 10 April 2015. The Court noted in an order dated 28 April 2015 that failure to honour reward schemes would discourage informants and lead to losses for the public exchequer.

On 20 December 2024, the Court was informed that Rs. 19,44,802 had been determined as payable, with further clarification that this sum related to one oil company only. The respondents cited that government sanction was awaited.

An affidavit by Joint Commissioner Mr. Shanmugarajan S. dated 21 March 2025 introduced a new defence claiming the petitioner had not submitted Form-A, a procedural requirement. The Court found that this form was indeed submitted and attached to the petition.

 “The Respondents do not wish to comply with their own Circular/Resolution regarding the payment of reward to the Petitioner.”

“Even after accepting the Respondents’ contentions that the revenue must be irrevocably realised, some reward is still due and payable to the Petitioner.”

“Considerable time was wasted by not precisely informing the Court of the number of recoveries made irrevocably.”

“In the communications dated 7 September 2015 and 4 October 2024, a determination was made, as a result of which, the Joint Commissioner of Sales Tax decided that an amount of Rs. 19,44,802/- was payable as a reward to the Petitioner.”

“There is no basis for the Respondents to now retract and refuse payment of even this amount, which has been determined by them.”

“Once the Government formulates a reward scheme, it should be operated fairly and squarely.”

“Informers, based on whose information, tax evaders are brought to book and taxes recovered, should not be made to run from pillar to post or otherwise suffer frustration.”

“Instead of granting sanction, the Government’s Affidavit points out that the Petitioner had not provided information in the prescribed Form–A and therefore, no reward amount was payable.”

“Factually, the information was provided in Form-A, and this form is also appended to the Petition.”

“This latest defence has been raised without verifying the records or factual position.”

“The Respondents have consistently been uncooperative in providing the necessary details, solely to delay the payment indefinitely.”

“There must be no unreasonable delay in paying the determined reward amounts, and the practice of raising frivolous and belated objections only to avoid legitimate payments must also be eschewed.”

The Court directed that the respondents must pay the determined reward amount of Rs. 19,44,802 to the petitioner within six weeks from the date of uploading of the order. It further ordered that failure to do so shall result in the amount accruing interest at the rate of 8% per annum. The Court explicitly held that this interest shall be recovered from the officers responsible for the delay.

The Court mandated that the Finance Secretary must ensure that such interest, if paid from the public treasury, is recovered from the erring officers after conducting an inquiry.

The Court directed the Sales Tax Commissioner and the Finance Secretary, State of Maharashtra, to determine the precise amount of rewards payable to the petitioner within six months from the date of the order. Upon such determination, the reward amount must be paid to the petitioner within two months.

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The authorities were further directed to supply the petitioner with full particulars of recoveries made, the status of appeals, and related information. They were instructed to hear the petitioner and consider all documents he may produce. The Court observed that full particulars were not being supplied either to the petitioner or the Court, solely to delay the payment of the reward.

The Court clarified that any amount accepted by the petitioner shall be under protest and without prejudice to his rights to claim any further sum under the law.

The Court made the rule partly absolute and disposed of the writ petition and interim application accordingly, without any order as to costs.

Advocates Representing the Parties:

For the Petitioner: Mr. D. S. Sakhalkar with Mr. Himanshu Thakur i/b Suresh Patil

For the Respondents: Ms. Neeta V. Masurkar for Respondent Nos. 1 and 4; Mr. Himanshu Takke, AGP, for Respondent Nos. 2 and 3

Case Title: Darshan Singh Parmar v. Union of India & Ors.

Neutral Citation: 2025: BHC-OS:9293-DB

Case Number: Writ Petition No. 2283 of 2013

Bench: Justice M.S. Sonak and Justice Jitendra Jain