Safiya Malik

The Division Bench of the High Court of Delhi comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela dismissed a writ petition challenging the constitutional validity of Clause 3.3 of the 2015 Guidelines for Grant of Reward to Informers and Government Servants. The court stated that the challenge was barred by the doctrine of constructive res judicata and upheld the discretionary nature of reward allocation.

The petitioner approached the court under Article 226 of the Constitution, seeking a declaration that Clause 3.3 of the Guidelines issued on 31.07.2015 by the Central Board of Excise and Customs was unconstitutional for being arbitrary, unguided, and unreviewable. The Guidelines govern the reward mechanism for informers and government servants involved in cases under various revenue enforcement laws, including the Customs Act, Central Excise Act, NDPS Act, and the Finance Act.

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The dispute arose from intelligence provided by the petitioner on January 29, 2001, which allegedly led to the discovery of Central Excise duty evasion amounting to Rs. 23.89 crores. Following a settlement under the "Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019," the final recovery stood at Rs. 11.94 crores. The petitioner claimed a reward of Rs. 2.38 crores, asserting entitlement to 20% of the recovered amount under Clause 5.1.1 of the Guidelines.

After initial representations and a reward of Rs. 25 lakhs (approximately 2% of the amount claimed) was granted, the petitioner filed a series of legal challenges. A writ petition (W.P.(C) No. 14658/2024) was first dismissed by a Single Judge on October 29, 2024, with the court citing Clause 3.3.1 of the Guidelines and Supreme Court precedent in Union of India v. R. Padmanabhan (2003) 7 SCC 270, which affirmed the ex-gratia and discretionary nature of such rewards. An intra-court appeal (LPA 1219/2024) met the same fate on December 17, 2024.

The current writ petition, filed subsequently, specifically challenged the validity of Clause 3.3, arguing that it lacked transparency, fairness, and procedural safeguards such as appeal or review mechanisms. The petitioner contended that such a scheme contravenes Articles 14, 21, and 300A of the Constitution.

The respondents, represented by the Additional Solicitor General, opposed the petition on multiple grounds, asserting the discretionary nature of the scheme and invoking the doctrine of constructive res judicata. They argued that the petitioner had opportunities to raise the issue of validity of Clause 3.3 in previous rounds of litigation, which he failed to do, thereby barring the current petition.

The court began by outlining the principle of constructive res judicata as codified in Section 11 and Order II Rule 2 of the Code of Civil Procedure. It noted that while these provisions do not directly apply to writ proceedings under Article 226, the Supreme Court has consistently held that the underlying principles of res judicata are applicable to such writs as a matter of public policy.

Referring to Devilal Modi v. STO, Ratlam and State of U.P. v. Nawab Hussain, the court held: "The general principle underlying the doctrine of res judicata is ultimately based on considerations of public policy. One important consideration of public policy is that the decisions pronounced by courts of competent jurisdiction should be final, unless they are modified or reversed by appellate authorities."

The bench noted that the petitioner had ample opportunity to challenge Clause 3.3 in his earlier writ petition and appellate proceedings. The failure to do so, according to the court, activated the bar under the principle of constructive res judicata:

"Having discussed the issue relating to applicability of the principle of Constructive Res Judicata to the proceedings drawn under Article 226 of the Constitution of India, we may now examine as to whether the petitioner could have, or ought to have, or might have, raised the issue in the earlier round of litigation."

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It was concluded: "Challenge to Clause 3.3 of the Guidelines, having been omitted by the petitioner in earlier round of litigation, in our opinion, by applying the principle of Constructive Res Judicata, the instant writ petition, where a prayer to strike down Clause 3.3 of the Guidelines as being unconstitutional has been made, will not be maintainable."

Accordingly, the court dismissed the writ petition in its entirety. The court concluded:

"For the reasons aforesaid, we are of the considered opinion that, the prayer made in the present writ petition is barred by the principle of Constructive Res Judicata and, therefore, the writ petition is not maintainable."

No order as to costs was passed.

Advocates Representing the Parties

For the Petitioner: Mr. Manish Raghav and Mr. Shivaansh Dixit

For the Respondents: Mr. Chetan Sharma, Additional Solicitor General with Mr. Rakesh Kumar (CGSC), Mr. Amit Gupta, Mr. Saurabh Tripathi, Mr. Shubham Sharma, and Ms. Urja Pandey

Case Title: S C Gupta v. Union of India and Anr.

Neutral Citation: 2025: DHC:3273-DB

Case Number: W.P.(C) 4462/2025 & CM APPL. 20619/2025

Bench: Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela

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