Full Judgment Text
IN THE SUPREME COURT OF INDIA
ORIGINAL JURISDICTION
CONTEMPT PETITION (CRL.) NO.9 OF 2009
IN
CONTEMPT PETITION (CRL.) NO.15 OF 1997
Indirect Tax Practitioners Association ……..Petitioner
Versus
R.K. Jain …….Respondent
J U D G M E N T
G.S. Singhvi, J.
1. Whether by writing editorial, which was published in Excise Law
Times dated 1.6.2009 with the title “CESTAT PRESIDENT SETS HOUSE
IN ORDER – ANNUAL TRANSFERS FOR MEMBERS INTRODUCED –
REGISTRY IN LINE”, the respondent violated the undertaking filed in this
Court in Contempt Petition (Criminal) No.15 of 1997 and whether contents
of the editorial constitute criminal contempt within the meaning of Section
2(c) of the Contempt of Courts Act, 1971 (for short, ‘the Act’) are the
questions which need consideration in this petition filed by Indirect Tax
2
Practitioners’ Association, Bangalore under Articles 129 and 142 of the
Constitution of India.
2. This Court had, after taking cognizance of letter dated 18.9.1997
written by Justice U.L. Bhat, the then President of the Customs, Excise and
Gold (Control) Appellate Tribunal to the Chief Justice of India pointing out
that the respondent had published objectionable editorials in 1996 (86)
Excise Law Times pages A169 to A179, 1996 (87) Excise Law Times pages
A59 to A70 and 1997 (94) Excise Law Times pages A65 to A82 containing
half truths, falsehoods and exaggerated versions of the alleged deficiencies
and irregularities in the functioning of the Tribunal, initiated contempt
proceedings against the respondent which came to be registered as Contempt
Petition (Criminal) No.15 of 1997. On 25.8.1998, the respondent filed an
undertaking, the relevant portions of which are reproduced below:
“I realize that my approach and wordings in the Impugned
Editorials of ELT have given the impression of scandalising or
lowering the authority of CEGAT. I state that I had no such
intention as I had undertaken the exercise in good faith and in
public interest. I sincerely regret the writing of the said
Editorials which have caused such an impression.
That I have been advised by my senior counsel – Mr. Shanti
Bhushan that in future whenever there are any serious
complaints regarding the functioning of CEGAT, the proper
course would be to first bring those matters to the notice of the
Chief Justice of India, and/or the Ministry of Finance and await
3
a response or corrective action for a reasonable time before
taking any other action. I undertake to the court to abide by this
advise of my counsel in future.”
After taking cognizance of the same, the Court passed the following
order:-
“Mr. Shanti Bhushan, learned counsel for the respondent
(alleged contemnor) tenders a statement in writing signed by
the respondent. We accept the regret tendered by the
respondent in the said statement. We also accept the
undertaking to Court given by the respondent in the said
statement. Having regard to the aforesaid, the contempt notice
is discharged. There will be no order as to costs.
We express our gratitude to Mr. T.R. Andhyarujina who as
assisted the Court at our request.”
3. During the pendency of the aforementioned contempt case, the
respondent had written detailed letters dated 2.6.2008, 7.7.2008, 23.7.2008,
26.7.2008, 9.8.2008 and 12.8.2008 to the Finance Minister, Government of
India highlighting specific cases of irregularities, malfunctioning and
corruption in the Central Excise, Customs and Service Tax Appellate
Tribunal (CESTAT). After the notice of contempt was discharged, the
respondent wrote two more letters dated 21.10.2008 and 28.2.2009 to the
Finance Minister on the same subject and also pointed out how the
appointment and posting of Shri T.K. Jayaraman, Member CESTAT were
4
irregular. He drew the attention of the addressee to the fact that some of the
orders pronounced by CESTAT had been changed. He wrote similar letters
to the Revenue Secretary, President, CESTAT, Registrar, CESTAT and the
Central Board of Excise and Customs. The particulars of these letters as
contained in the reply affidavit filed by the respondent are as under:
LETTERS TO THE FINANCE MINISTER
| Letter Date | Subject |
|---|---|
| 02-06-2008 | CESTAT – Member-Advocate Nexus |
| 07-07-2008 | Gold Smuggling – Carrying of gold in<br>soles of the shoes is a trade practice as per<br>CESTAT order – Need for CBI enquiry |
| 23-07-2008 | Gold Smuggling – Carrying of gold in<br>soles of the shoes is a trade practice as per<br>CESTAT order – Need for CBI enquiry |
| 26-07-2008 | Change of “Pronounced Orders” by<br>CESTAT Members – Open Court<br>handwritten order directing deposit of<br>Rs.15 lakhs changed to Rs.5 lakhs –<br>Department’s ROM application pointing<br>out this discrepancy, repeatedly dismissed<br>by CESTAT |
| 09-08-2008 | CESTAT : Changing of orders – Direction<br>for deposit of Rs.50 lakhs changed to<br>Rs.50,000 in a Customs case booked by<br>DRI for “mis-declaration” of imports from<br>China involving Rs.2.07 crores – Need for<br>CBI Enquiry |
| 12-08-2008 | CESTAT, Settlement Commission,<br>Revisionary Authority and Govt.<br>Litigation in revenue evasion cases<br>involving high revenue – Request for<br>personal meeting |
5
| 21.10.2008 | Appointment of Judicial Members to<br>CESTAT – Serious irregularities and<br>tampering with the records – Mis-<br>declaration as to eligibility by Mr. M.V.<br>Ravindran, Member (Judicial), CESTAT. |
|---|---|
| 28-02-2009 | CESTAT : Changing of orders – Direction<br>for deposit of Rs.50 lakhs changed to<br>Rs.50,000 in a Customs case booked by<br>DRI involving Rs.2.07 crores – Further<br>revelations and Evidences – Need for CBI<br>Enquiry strengthens |
LETTERS TO THE REVENUE SECRETARY
| Letter Date | Subject |
|---|---|
| 05-09-2008 | CESTAT : Proposal for confirmation of<br>Shri M.V. Ravindran, Member (J) and Shri<br>K.K. Agarwal, Member (T) may be kept in<br>abeyance, pending verification of<br>allegations and irregularities committed by<br>them – Initiation of disciplinary<br>proceedings for their removal. |
| 22-10-2008 | Appointment of Judicial Members to<br>CESTAT – Serious irregularities and<br>tampering with the records – Mis-<br>declaration as to eligibility by Mr. M.V.<br>Ravindran, Member (Judicial), CESTAT |
| 10-11-2008 | CESTAT – Non-functioning of the<br>Chennai Bench of the CESTAT since<br>3-11-2008 |
| 19-11-2008 | CESTAT – Unauthorised and manipulated<br>Tour Notes/Tours by Ms. Jyoti<br>Balasundaram, Vice President – Need for<br>Vigilance Enquiry |
| 14-02-2009 | Appeal by Revenue Department in S.C. –<br>95% of appeal lost – Departments<br>representation at High Court still worse –<br>Need for remedial measures |
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| 02-03-2009 | CESTAT : Changing of orders – Direction<br>for deposit of Rs.50 lakhs changed to Rs.<br>50,000 in a Customs case booked by DRI<br>involving Rs. 2.07 crores – Further<br>revelations and Evidences – Need for CBI<br>Enquiry strengthens |
|---|
LETTERS TO THE HON’BLE PRESIDENT, CESTAT
| Letter Date | Subject |
|---|---|
| 30-08-2008 | Change of “Pronounced Orders” by<br>CESTAT Members – Open Court<br>handwritten order directing deposit of<br>Rs.15 lakhs changed to Rs.5 lakhs –<br>Department’s ROM Application pointing<br>out this discrepancy, repeatedly dismissed<br>by CESTAT |
| 01-09-2008 | CESTAT - Changing of orders – Direction<br>for deposit of Rs.50 lakh changed to<br>Rs.50,000 in a Customs case booked by<br>DRI for “mis-declaration” of imports from<br>China involving Rs.2.07 crores – Need for<br>CBI Enquiry |
| 07-10-2008 | Manner of listing of matters in the Cause<br>List |
| 11-10-2008 | Need for uniform practice for dealing with<br>Mention matters by different Zonal<br>Benches of the CESTAT |
| 05-05-2009 | Annual Physical Checking of pending<br>Appeals and Applications – Misplacement<br>of Appeal files after grant of Stay in heavy<br>matters |
| 22-05-2009 | Pronouncement of reverse orders within<br>reasonable period – Need for re-hearing<br>when order not pronounced within 4<br>months – Bombay High Court decision |
| 08-06-2009 | Pronouncement of “Reserved Order” –<br>Listing in cause list. |
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| 13-07-2009 | Complaint against Shri S. Chandran,<br>Registrar, CESTAT for non-compliance of<br>Miscellaneous Order No.412/2007-<br>SM(BR), dated 4-10-2007 passed by<br>Justice R.K. Abhichandani, and misusing<br>of authority as First Appellate Authority<br>under RTI Act, by suppressing/fabricating<br>information |
|---|---|
| 31-08-2009 | Disciplinary action against Shri S.K.<br>Verma, Assistant Registrar, CESTAT as<br>per the directions of the Presiding Officer<br>of Debt Recovery Tribunal-II, Delhi and<br>for other complaint and lapses |
| 02-09-2009 | Non-maintenance of records for<br>Supplementary Cause Lists issued by<br>Chennai Bench of the CESTAT |
| 10-09-2009 | Improper and illegal transfer of the<br>Customs Appeal Nos.C/112 & 139/2009<br>from Division Bench to Single Member<br>Bench in violation of provisions of<br>Customs Act and CESTAT (Procedure)<br>Rules, 1982 – Need for Inquiry by an<br>Independent Agency. |
| 16-09-2009 | Service Tax appeals relating to valuation<br>and rate of tax by Single Member Bench in<br>violation of Section 86(7) of Finance Act,<br>1994 |
| 19-09-2009 | Need for incorporating the amount of duty,<br>penalty and fine in the orders passed by<br>the CESTAT |
| 22-09-2009 | Act of insubordination by Asst. Registrar<br>by commenting on exercise of power by<br>President as violating rules and exceeding<br>powers – Need for disciplinary action |
| 23-09-2009 | Information about antedating of orders and<br>delayed release of orders, particularly of<br>CESTAT Bangalore and of Single<br>Member Bench of the CESTAT, New<br>Delhi |
8
| 05-10-2009 | Report of despatch of CESTAT Orders –<br>Non-Compliance By CESTAT, Mumbai |
|---|---|
| 16-10-2009 | Information about antedating of orders and<br>delayed release of orders, particularly by<br>Bangalore Bench of CESTAT |
| 16-10-2009 | Lodging of Police Complaint for missing<br>records from CESTAT, New Delhi |
| 23-10-2009 | Delay in dispatch of the orders – Non<br>submission of weekly report for dispatch<br>of orders by the Regional Benches –<br>Inaction by the Registrar and Deputy<br>Registrar at CESTAT Headquarters, New<br>Delhi. |
| 26-10-2009 | Complaint against Shri P.K. Das, Hon’ble<br>Member (Judicial), CESTAT, New Delhi |
| 08-01-2010 | Strengthening the CESTAT by providing<br>facilities to the Members in the Tribunal |
LETTERS TO REGISTRAR, CESTAT
| Letter Date | Subject |
|---|---|
| 23-08-2008 | Listing of matter in two different courts |
| 09-12-2008 | Files for Tour orders and Roaster orders<br>for 2001 – missing |
| 09-12-2008 | Issuing of letters without File Number or<br>letter number or the dispatch diary number |
| 27-01-2009 | Withholding of Supreme Court remand<br>orders by the CESTAT Registry, Mumbai<br>– Request for disciplinary action. |
| 04-11-2009 | Fault of CESTAT Registry, Mumbai in not<br>placing before the Bench the proof of<br>deposit of pre-deposit amount |
| 14-11-2009 | Tracing out of case records of Kozy Silks<br>(P) Ltd. |
9
LETTER TO THE CDR, CESTAT, NEW DELHI
| Letter Date | Subject |
|---|---|
| 01-08-2009 | Cross-Appeals to be heard together |
| 06-08-2009 | CESTAT Orders – Discrepancies between<br>pronounced orders and issued orders –<br>Strengthening of Departmental<br>Representation to safeguard revenue –<br>Reg. |
LETTERS TO CENTRAL BOARD OF EXCISE & CUSTOMS
| Letter Date | Subject |
|---|---|
| 02-03-2009 | CESTAT : Changing of orders - Direction<br>for deposit of Rs.50 lakhs changed to<br>Rs.50,000 in a Customs case booked by<br>DRI involving Rs. 2.07 crores – Further<br>revelations and Evidences – Need for CBI<br>Enquiry strengthens |
| 06-06-2009 | Change in Pronounced Orders |
| 13-06-2009 | Appeals under Section 35G of the Central<br>Excise Act to be filed within 180 days -<br>High Courts have no power to condone the<br>delay – Latest Supreme Court decision in<br>the case of Chaudharana Steels (P) Ltd. v.<br>Commissioner of Central Excise,<br>Allahabad – Need for suitably modifying<br>the CBE & C Circular No.888/8/2009-CX,<br>dated 21-5-09 |
| 08-08-2009 | Change of pronounced orders by CESTAT<br>Members – Whereabouts of complaint<br>dated 4-8-2008 made to the Finance<br>Minister. |
4. Since no one seems to have taken cognizance of the letters written by
the respondent, he wrote the editorial in which he commended the
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administrative and judicial reforms initiated by the new President of
CESTAT and, at the same time, highlighted how some members of
CESTAT managed their stay at particular place. He also made a mention of
what he perceived as irregularities in the appointment and posting of Shri
T.K. Jayaraman, erstwhile Commissioner of Central Excise, Bangalore as
member CESTAT. The respondent then referred to some of the orders
passed by the Bench comprising Shri T.K. Jayaraman, which were adversely
commented upon by the High Courts of Karnataka and Kerala. He also
made a mention of the irregularities in the functioning of the Registry of
CESTAT.
5. The petitioner, whose members are said to be appearing before
Bangalore, Chennai, Bombay, Delhi, Ahmedabad and Calcutta Benches of
CESTAT, took up the cause of Shri T.K. Jayaraman and submitted
complaint dated 11.6.2009 to the President of CESTAT accusing the
respondent of trying to scandalize the functioning of CESTAT and lower its
esteem in the eyes of the public. By an order dated 16.7.2009, the President,
CESTAT appointed a two-member committee to look into the grievance
made by the petitioner as also the allegations contained in the editorial. The
terms of reference made to the Inquiry Committee are as follows:
11
“At this stage, the terms of reference for inquiry by the
Committee shall relate to verification of grievances in the letter
of the Association as well as the allegations made in the said
editorial regarding the irregularities in relation to the
appointment of Members of the Tribunal and regarding the
decisions by some of the Bench of the Tribunal.”
By letter dated 24.7.2009, the President, CESTAT informed Shri B.V.
Kumar, President of the petitioner-Association about appointment of the
Inquiry Committee.
6. Soon thereafter, the Inquiry Committee informed the parties that it
would meet at Bangalore on 11.8.2009 but President of the petitioner-
Association expressed his inability to attend the meeting and sought
re-schedulment for 28/29.8.2009. It appears that members of the petitioner-
Association were apprehensive that an inquiry into the truthfulness or
otherwise of the contents of the editorial may cause embarrassment to some
of them as also some members of CESTAT and, therefore, they decided to
adopt a shortcut to silence him. In furtherance of this object, the petitioner
sent letters dated 8.8.2009 and 25.8.2009 to the Solicitor General of India
and the Attorney General of India respectively seeking their consent for
filing contempt petition against the respondent. In neither of those letters,
the petitioner made a mention of the Inquiry Committee constituted by the
12
President, CESTAT to look into the complaint made by it. The Attorney
General gave his consent vide letter dated 9.9.2009. Thereafter, this petition
was filed.
7. The petitioner has sought initiation of contempt proceedings against
the respondent by asserting that the editorial written by him is in clear
violation of the undertaking given to this Court that serious complaint
regarding the functioning of the Tribunal will be brought to the notice of the
Chief Justice of India, and/or the Ministry of Finance and response or
corrective action will be awaited for a reasonable time before taking further
action. According to the petitioner, the editorial in question will not only
create a sense of fear and inhibition in the minds of the members who are
entrusted with the onerous task of dispensing justice, but also prevent the
advocates and practitioners who appear before CESTAT from advancing the
cause of their clients without any apprehension of bias/favouritism. The
petitioner also pleaded that by targeting the particular member of CESTAT,
the respondent has scandalized the entire institution.
8. In the written statement filed by him, the respondent has taken stand
that he cannot be accused of violating the undertaking filed in this Court on
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25.8.1998 because before writing the editorial he had brought all the facts to
the notice of the Finance Minister and the Revenue Secretary, Government
of India as also the President, CESTAT and other functionaries, but no one
had taken corrective measures. The respondent has claimed that the sole
object of writing the editorial was to enable the concerned authorities to
streamline the functioning of CESTAT on administrative and judicial side
and take other corrective measures. He has referred to the observations
made by this Court in R.K. Jain v. Union of India AIR (1993) SC 1769,
nd
162 Report of the Law Commission on the Review of Functioning of CAT,
CEGAT and ITAT and pleaded that he had written the editorial with a spirit
of reform and not to scandalize the functioning of CESTAT.
9. Shri P.S. Narasimhan, learned senior counsel appearing for the
petitioner emphasized that the editorial written by the respondent is clearly
intended to scandalize the functioning of CESTAT and, therefore, this Court
should take cognizance and initiate proceedings against him under Sections
2(c), 12 and 15 of the Act read with Article 129 of the Constitution. Learned
senior counsel submitted that contents of the editorial amount to criminal
contempt because adverse and uncharitable comments made by the
respondent qua some of the orders passed by the particular Bench of
14
CESTAT amounts to direct interference in the administration of justice and
the same are bound to affect the credibility of the Tribunal in the eyes of the
public in general and the litigants in particular who will have no confidence
in the particular member of CESTAT and those appearing before the
particular Bench will not be able to represent the cause of their clients with
the freedom which is sine qua non for dispensation of justice.
10. Shri Prashant Bhushan, learned counsel for the respondent questioned
the bona fides of the petitioner and argued that this petition is liable to be
dismissed because the same has been filed with an oblique motive of
preventing the respondent from highlighting the irregularities in the
functioning of CESTAT. Learned counsel emphasized that the petitioner is
guilty of misleading the Attorney General in granting consent for filing of
the contempt petition because the factum of appointment of two-Member
Committee by the President, CESTAT was deliberately not mentioned in
letter dated 25.8.2009. Learned counsel then submitted that the sole object
of writing the editorial was to awaken the concerned functionaries of the
Government and CESTAT about the serious irregularities in the
appointment, posting and transfer of the Members of CESTAT and orders
15
passed by the particular Bench, which were highly detrimental to public
interest.
11. We have given serious thought to the entire matter. One of the two
minor issues which needs our consideration is whether by writing the
editorial in question, the respondent has committed breach of the
undertaking filed in Contempt Petition (Crl.) No.15/1997. The other issue is
whether the editorial is intended to scandalize the functioning of CESTAT or
the same amounts to interference in the administration of justice and whether
the voice of a citizen who genuinely believes that a public body or
institution entrusted with task of deciding lis between the parties or their
rights is not functioning well or is passing orders contrary to public interest
can be muffled by using the weapon of contempt.
12. In our view, the respondent cannot be charged with the allegation of
having violated the undertaking filed in this Court on 25.8.1998. The
respondent is not a novice in the field. For decades, he has been fearlessly
using his pen to highlight malfunctioning of CEGAT and its successor
th
CESTAT. Letter dated 26 December, 1991 written by him to the then
Chief Justice of India, M.H. Kania, J. complaining that CEGAT is without a
16
President for last over six months and the functioning of the Tribunal was
adversely affected because the Benches would sit hardly for two hours or so
and further that there was tendency to adjourn the cases, was ordered to be
registered as a petition in public interest. After an in depth analysis of the
relevant constitutional and statutory provisions, this Court gave certain
suggestions for improving the functioning of CEGAT and other Tribunals
constituted under Articles 323-A and 323-B – R.K. Jain v. Union of India
(1993) 4 SCC 119. K. Ramaswamy, J., who authored the main judgment,
declined to interfere with the appointment of Shri Harish Chander as
President, CEGAT, but observed as under:
“There are persistent allegations against malfunctioning of the
CEGAT and against Harish Chander himself. Though we
exercised self-restraint to assume the role of an investigator to
charter out the ills surfaced, suffice to say that the Union
Government cannot turn a blind eye to the persistent public
demands and we direct to swing into action, an in-depth enquiry
made expeditiously by an officer or team of officers to control
the malfunctioning of the institution. It is expedient that the
Government should immediately take action in the matter and
have a fresh look. It is also expedient to have a sitting or retired
senior Judge or retired Chief Justice of a High Court to be the
President.”
Ahmadi, J. (as he then was) speaking for himself and Punchhi, J. (as he then
was) observed:
17
“7. The allegations made by Shri R.K. Jain in regard to the
working of the CEGAT are grave and the authorities can ill
afford to turn a Nelson’s eye to those allegations made by a
person who is fairly well conversant with the internal working
of the Tribunal. Refusal to inquire into such grave allegations,
some of which are capable of verification, can only betray
indifference and lack of a sense of urgency to tone up the
working of the Tribunal. Fresh articles have appeared in the
Excise Law Times which point to the sharp decline in the
functioning of the CEGAT pointing to a serious management
crisis. It is high time that the administrative machinery which is
charged with the duty to supervise the working of the CEGAT
wakes up from its slumber and initiates prompt action to
examine the allegations by appointing a high-level team which
would immediately inspect the CEGAT, identify the causes for
the crisis and suggest remedial measures. This cannot brook
delay.”
13. The respondent was very much conscious of the undertaking filed in
the earlier contempt proceedings and this is the reason why before writing
the editorial, he sent several communications to the concerned functionaries
to bring to their notice serious irregularities in the transfer and posting of
members, appointment of members, changes made in the pronounced orders
and many unusual orders passed by the particular Bench of CESTAT, which
were set aside by the Karnataka and the Kerala High Courts after being
subjected to severe criticism. The sole purpose of writing those letters was
to enable the concerned authorities to take corrective measures but nothing
appears to have been done by them to stem the rot. It is neither the pleaded
case of the petitioner nor any material has been placed before this Court to
18
show that the Finance Minister or the Revenue Secretary, Government of
India had taken any remedial action in the context of the issues raised by the
respondent. Therefore, it is not possible to hold the respondent guilty of
violating the undertaking given to this Court.
14. Before adverting to the second and more important issue, we deem it
necessary to remind ourselves that freedom of speech and expression has
always been considered as the most cherished right of every human being.
Justice Brennan of U.S. Supreme Court, while dealing with a case of libel –
New York Times Company v. L.B. Sullivan observed that “it is a prized
privilege to speak one’s mind, although not always with perfect good taste,
on all public institutions and this opportunity should be afforded for
vigorous advocacy no less than abstract discussion.” In all civilized
societies, the Courts have exhibited high degree of tolerance and accepted
adverse comments and criticism of their orders/judgments even though, at
times, such criticism is totally off the mark and the language used is
inappropriate. The right of a member of the public to criticize the
functioning of a judicial institution has been beautifully described by the
Privy Council in Andre Paul Terence Ambard v. Attorney General of
Trinidad and Tobago AIR 1936 PC 141 in the following words:
19
“No wrong is committed by any member of the public who
exercises the ordinary right of criticizing in good faith in
private or public the public act done in the seat of justice. The
path of criticism is a public way: the wrongheaded are
permitted to err therein: provided that members of the public
abstain from imputing improper motives to those taking part in
the administration of justice, and are genuinely exercising a
right of criticism and not acting in malice or attempting to
impair the administration of justice, they are immune. Justice is
not a cloistered virtue: she must be allowed to suffer the
scrutiny and respectful even though outspoken comments of
ordinary men.”
In Debi Prasad Sharma v. The King Emperor AIR 1943 PC 202, Lord
Atkin speaking on behalf of the Judicial Committee observed:
“In 1899 this Board pronounced proceedings for this species of
contempt (scandalization) to be obsolete in this country, though
surviving in other parts of the Empire, but they added that it is a
weapon to be used sparingly and always with reference to the
administration of Justice: McLeod v. St. Auhyn . In In re a
Special Reference from the Bahama Islands the test applied by
the very strong Board which heard the reference was whether
the words complained of were in the circumstances calculated
to obstruct or interfere with the course of justice and the due
administration of the law. In Queen v. Gray it was shown that
the offence of scandalizing the court itself was not obsolete in
this country. A very scandalous attack had been made on a
Judge for his judicial utterances while sitting in a criminal case
on circuit, and it was with the foregoing opinions on record that
Lord Russell of Killowen, C.J., adopting the expression of
Wilmot, C.J., in his opinion in Rex v. Almon which is the source
of much of the present law on the subject, spoke of the article
complained of as calculated to lower the authority of the
Judge.”
20
In Regina v. Commissioner of Police of the Metropolis (1968) 2 All ER
319, Lord Denning observed:
‘‘Let me say at once that we will never use this jurisdiction as a
means to uphold our own dignity. That must rest on surer
foundations. Nor will we use it to suppress those who speak
against us. We do not fear criticism, nor do we resent it. For
there is something far more important at stake. It is no less than
freedom of speech itself.
It is the right of every man, in Parliament or out of it, in the
press or over the broadcast, to make fair comment, even
outspoken comment, on matters of public interest. Those who
comment can deal faithfully with all that is done in a court of
justice. They can say that we are mistaken, and our decisions
erroneous, whether they are subject to appeal or not. All we
would ask is that those who criticise us will remember that,
from the nature of our office, we cannot reply to their
criticisms. We cannot enter into public controversy. Still less
into political controversy. We must rely on our conduct itself to
be its own vindication.
Exposed as we are to the winds of criticism, nothing which is
said by this person or that, nothing which is written by this pen
or that, will deter us from doing what we believe is right; nor, I
would add, from saying what the occasion requires, provided
that it is pertinent to the matter in hand. Silence is not an option
when things are ill done.’’
15. In the land of Gautam Buddha, Mahavir and Mahatma Gandhi, the
freedom of speech and expression and freedom to speak one’s mind have
always been respected. After independence, the Courts have zealously
guarded this most precious freedom of every human being. Fair criticism of
the system of administration of justice or functioning of institutions or
21
authorities entrusted with the task of deciding rights of the parties gives an
opportunity to the operators of the system/institution to remedy the wrong
and also bring about improvements. Such criticism cannot be castigated as
an attempt to scandalize or lower the authority of the Court or other judicial
institutions or as an attempt to interfere with the administration of justice
except when such criticism is ill motivated or is construed as a deliberate
attempt to run down the institution or an individual Judge is targeted for
extraneous reasons. Ordinarily, the Court would not use the power to punish
for contempt for curbing the right of freedom of speech and expression,
which is guaranteed under Article 19(1)(a) of the Constitution. Only when
the criticism of judicial institutions transgresses all limits of decency and
fairness or there is total lack of objectivity or there is deliberate attempt to
denigrate the institution then the Court would use this power. The
judgments of this Court in Re S. Mulgaokar (1978) 3 SCC 339 and P.N.
Duda v. P. Shiv Shanker (1988) 3 SCC 167 are outstanding examples of
this attitude and approach. In the first case, a three-Judge Bench considered
the question of contempt by newspaper article published in Indian Express
dated 13.12.1977 criticising the Judges of this Court. The article noted that
the High Courts had strongly reacted to the proposal of introducing a code of
judicial ethics and propriety. In its issue dated December 21, 1977 an article
22
entitled “behaving like a Judge” was published which inter alia stated that
the Supreme Court of India was “packed” by Mrs Indira Gandhi “with pliant
and submissive judges except for a few”. It was further stated that the
suggestion that a code of ethics should be formulated by judges themselves
was “so utterly inimical to the independence of the judiciary, violative of the
constitutional safeguards in that respect and offensive to the self-respect of
the judges as to make one wonder how it was conceived in the first place”. A
notice had been issued to the Editor-in-Chief of the newspaper to show
cause why proceedings for contempt under Article 129 of the Constitution
should not be initiated against him in respect of the above two news items.
After examining the submissions made at the Bar, the Court dropped the
contempt proceedings. Beg, C.J., expressed his views in the following
words:
“Some people perhaps believe that attempts to hold trials of
everything and everybody by publications in newspapers must
include those directed against the highest Court of Justice in
this country and its pronouncements. If this is done in a
reasonable manner, which pre-supposes accuracy of
information about a matter on which any criticism is offered,
and arguments are directed fairly against any reasoning
adopted, I would, speaking for myself, be the last person to
consider it objectionable even if some criticism offered is
erroneous. In Bennett Coleman & Co. v. Union of India , I had
said (at p. 828) (SCC pp. 827-28):
“John Stuart Mill, in his essay on ‘Liberty’, pointed
out the need for allowing even erroneous opinions to
23
be expressed on the ground that the correct ones
become more firmly established by what may be
called the ‘dialectical’ process of a struggle with
wrong ones which exposes errors. Milton, in his
‘Areopagitica’ (1644) said:
Though all the winds of doctrine were let loose to
play upon the earth, so Truth be in the field, we do
injuriously by licensing and prohibiting to misdoubt
her strength. Let her and Falsehood grapple;
whoever knew Truth put to the worse, in a free and
open encounter?... Who knows not that Truth is
strong, next to the Almighty; she needs no policies,
no stratagems, no licensings to make her victorious;
those are the shifts and defences that error makes
against her power ....”
Political philosophers and historians have taught us
that intellectual advances made by our civilisation
would have been impossible without freedom of
speech and expression. At any rate, political
democracy is based on the assumption that such
freedom must be jealously guarded. Voltaire
expressed a democrat’s faith when he told, an
adversary in arguments : “I do not agree with a word
you say, but I will defend to the death your right to
say it”. Champions of human freedom of thought
and expression throughout the ages, have realised
that intellectual paralysis creeps over a society
which denies, in however subtle a form, due
freedom of thought and expression to its members.
“Although, our Constitution does not contain a
separate guarantee of Freedom of the Press, apart
from the freedom of expression and opinion
contained in Article 19(l)( a ) of the Constitution, yet,
it is well-recognised that the Press provides the
principal vehicle of expression of their views to
citizens. It has been said:
“Freedom of the Press is the Ark of the Covenant of
Democracy because public criticism is essential to
24
the working of its institutions. Never has criticism
been more necessary than today, when the weapons
of propaganda are so strong and so subtle. But, like
other liberties, this also must be limited.”
Krishna Iyer, J. agreed with C.J. Beg and observed:
“Poise and peace and inner harmony are so quintessential to the
judicial temper that huff, “haywire” or even humiliation shall
not besiege; nor, unveracious provocation, frivolous persiflage
nor terminological inexactitude throw into palpitating tantrums
the balanced cerebration of the judicial mind. The integral yoga
of shanti and neeti is so much the cornerstone of the judicial
process that criticism, wild or valid, authentic or anathematic,
shall have little purchase over the mentation of the Court. I
quite realise how hard it is to resist, with sage silence, the shafts
of acid speech; and, how alluring it is to succumb to the
temptation of argumentation where the thorn, not the rose,
triumphs. Truth’s taciturn strategy, the testimony of history
says, has a higher power than a hundred thousand tongues or
pens. In contempt jurisdiction, silence is a sign of strength since
our power is wide and we are prosecutor and judge.”
In the second case, this Court was called upon to initiate contempt
proceedings against Shri P. Shiv Shanker who, in his capacity as Minister
for Law, Justice and Company Affairs, delivered a speech in the meeting of
Bar Council of Hyderabad on November 28, 1987 criticising the Supreme
Court. Sabyasachi Mukharji, J. (as he then was) referred to large number of
precedents and made the following observation:
“Justice is not a cloistered virtue: she must be allowed to suffer
the scrutiny and respectful, even though outspoken, comments
of ordinary men” — said Lord Atkin in Ambard v. Attorney-
25
General for Trinidad and Tobago. Administration of justice and
judges are open to public criticism and public scrutiny. Judges
have their accountability to the society and their accountability
must be judged by their conscience and oath of their office, that
is, to defend and uphold the Constitution and the laws without
fear and favour. This the judges must do in the light given to
them to determine what is right. And again as has been said in
the famous speech of Abraham Lincoln in 1965: “With malice
towards none, with charity for all, we must strive to do the
right, in the light given to us to determine that right.” Any
criticism about the judicial system or the judges which hampers
the administration of justice or which erodes the faith in the
objective approach of judges and brings administration of
justice into ridicule must be prevented. The contempt of court
proceedings arise out of that attempt. Judgments can be
criticised; the motives of the judges need not be attributed, it
brings the administration of justice into deep disrepute. Faith in
the administration of justice is one of the pillars through which
democratic institution functions and sustains. In the free market
place of ideas criticisms about the judicial system or judges
should be welcomed, so long as such criticisms do not impair or
hamper the administration of justice. This is how courts should
approach the powers vested in them as judges to punish a
person for an alleged contempt, be it by taking notice of the
matter suo motu or at the behest of the litigant or a lawyer.
It has been well said that if judges decay, the contempt power
will not save them and so the other side of the coin is that
judges, like Caesar’s wife, must be above suspicion, per
Krishna Iyer, J. in Baradakanta Mishra v. Registrar of Orissa
High Court. It has to be admitted frankly and fairly that there
has been erosion of faith in the dignity of the court and in the
majesty of law and that has been caused not so much by the
scandalising remarks made by politicians or ministers but the
inability of the courts of law to deliver quick and substantial
justice to the needy. Many today suffer from remediless evils
which courts of justice are incompetent to deal with. Justice
cries in silence for long, far too long. The procedural wrangle is
eroding the faith in our justice system. It is a criticism which
26
the judges and lawyers must make about themselves. We must
turn the searchlight inward. At the same time we cannot be
oblivious of the attempts made to decry or denigrate the judicial
process, if it is seriously done. This question was examined in
Rama Dayal Markarha v. State of Madhya Pradesh where it
was held that fair and reasonable criticism of a judgment which
is a public document or which is a public act of a judge
concerned with administration of justice would not constitute
contempt. In fact such fair and reasonable criticism must be
encouraged because after all no one, much less judges, can
claim infallibility. Such a criticism may fairly assert that the
judgment is incorrect or an error has been committed both with
regard to law or established facts. But when it is said that the
judge had a predisposition to convict or deliberately took a turn
in discussion of evidence because he had already made up his
mind to convict the accused, or has a wayward bend of mind, is
attributing motives, lack of dispassionate and objective
approach and analysis and prejudging of the issues which
would bring administration of justice into ridicule. Criticism of
the judges would attract greater attention than others and such
criticism sometimes interferes with the administration of justice
and that must be judged by the yardstick whether it brings the
administration of justice into ridicule or hampers administration
of justice. After all it cannot be denied that predisposition or
subtle prejudice or unconscious prejudice or what in Indian
language is called “sanskar” are inarticulate major premises in
decision making process. That element in the decision making
process cannot be denied, it should be taken note of.”
In Baradakanta Mishra v. Registrar of Orissa High Court (1974) 1 SCC
374, Krishna Iyer, J. speaking for himself and P.N. Bhagwati, J., as he then
was,emphasized the necessity of maintaining constitutional balance between
two great but occasionally conflicting principles i.e. freedom of expression
which is guaranteed under Article 19(1)(a) and fair and fearless justice,
27
referred to “republican justification” suggested in the American system and
observed:
“Maybe, we are nearer the republican justification suggested in
the American system:
“In this country, all courts derive their authority
from the people, and hold it in trust for their security
and benefit. In this state, all judges are elected by
the people, and hold their authority, in a double
sense, directly from them; the power they exercise is
but the authority of the people themselves, exercised
through courts as their agents. It is the authority and
laws emanating from the people, which the judges
sit to exercise and enforce. Contempt against these
courts, the administration of their laws, are insults
offered to the authority of the people themselves,
and not to the humble agents of the law, whom they
employ in the conduct of their Government.”
This shift in legal philosophy will broaden the base of the
citizen’s right to criticise and render the judicial power more
socially valid. We are not subjects of a king but citizens of a
republic and a blanket ban through the contempt power, stifling
criticism of a strategic institution, namely, administration of
Justice, thus forbidding the right to argue for reform of the
judicial process and to comment on the performance of the
judicial personnel through outspoken or marginally excessive
criticism of the instrumentalities of law and justice, may be a
tall order. For, change through free speech is basic to our
democracy, and to prevent change through criticism is to petrify
the organs of democratic Government. The judicial instrument
is no exception. To cite vintage rulings of English Courts and to
bow to decisions of British Indian days as absolutes is to ignore
the law of all laws that the rule of law must keep pace with the
Rule of life. To make our point, we cannot resist quoting
McWhinney, who wrote:
28
“The dominant theme in American philosophy of law
today must be the concept of change — or revolution
— in law. In Mr Justice Oliver Wendell Holmes’ own
aphorism, it is revolting to have no better reason for a
rule of law than that it was laid down in the time of
Henry IV. prestige argument, from age alone, that
because a claimed legal rule has lasted a certain length
of time it must automatically be valid and binding at
the present day, regardless of changes in basic societal
conditions and expectations, is no longer very
persuasive. According to the basic teachings of the
Legal Realist and policy schools of law, society itself
is in continuing state of flux at the present day; and
the positive law, therefore, if it is to continue to be
useful in the resolution of contemporary major social
conflicts and social problems, must change in measure
with the society. What we have, therefore,
concomitantly with our conception of society in
revolution is a conception of law itself, as being in a
condition of flux, of movement. On this view, law is
not a frozen, static body of rules but rules in a
continuous process of change and adaptation; and the
judge, at the final appellate level anyway, is a part —
a determinant part — of this dynamic process of legal
evolution.”
This approach must inform Indian law, including contempt law.
It is very necessary to remember the legal transformation
in our value system on the inauguration of the Constitution, and
the dogmas of the quiet past must change with the challenges of
the stormy present. The great words of Justice Holmes uttered
in a different context bear repetition in this context:
“But when men have realized that time has upset
many fighting faiths, they may come to believe even
more than they believe the very foundations of their
own conduct that the ultimate good desired is better
reached by free trade in ideas — that the best test of
29
truth is the power of the thought to get itself accepted
in the competition of the market, and that truth is the
only ground upon which their wishes safely can be
carried out. That, at any rate, is the theory of our
Constitution. It is an experiment, as all life is an
experiment. Every year, if not every day, we have to
wager our salvation upon some prophecy based upon
imperfect knowledge. While that experiment is part of
our system I think that we should be eternally vigilant
against attempts to check the expression of opinions
that we loathe and believe to be fraught with death,
unless they so imminently threaten immediate
interference with the lawful and pressing purposes of
the law that an immediate check is required to save
the country.”
(emphasis supplied)
16. We shall now examine whether the editorial written by the respondent
is an attempt to scandalise CESTAT as an institution or amounts to an
interference with the administration of justice. The definition of the term
‘criminal contempt’ as contained in Section 2 (c) of the Act reads as under:-
“2. Definitions –
(c) "criminal contempt" means the publication (whether by
words, spoken or written, or by signs, or by visible
representation, or otherwise) of any matter or the doing of any
other act whatsoever which-
(i) scandalizes or tends to scandalise, or lowers or tends to
lower the authority of, any court; or
(ii) prejudices, or interferes or tends to interfere with, the due
course of any judicial proceeding; or
30
(iii) interferes or tends to interfere with, or obstructs or tends to
obstruct, the administration of justice in any other manner;”
Section 13, which was substituted by Act No.6 of 2006 and which
empowers the Court to permit justification by truth as a valid defence in a
contempt proceeding also reads as under:-
“13. Contempts not punishable in certain cases.–
Notwithstanding anything contained in any law for the time
being in force, ––
(a) no court shall impose a sentence under this Act for a
contempt of court unless it is satisfied that the contempt is of
such a nature that it substantially interferes, or tends
substantially to interfere with the due course of justice;
(b) the court may permit, in any proceeding for contempt of
court, justification by truth as a valid defence if it is satisfied
that it is in public interest and the request for invoking the said
defence is bona fide.”
17. The word ‘scandalize’ has not been defined in the Act. In Black’s
th
Law Dictionary, 8 Edition, page 1372, reference has been made to Eugene
A Jones, Manual of Equity Pleading and Practice 50-51, wherein the word
scandal has been described as under:
“scandal consists in the allegation of anything which is
unbecoming the dignity of the court to hear, or is contrary to
decency or good manners, or which charges some person with a
crime not necessary to be shown in the cause, to which may be
31
added that any unnecessary allegation, bearing cruelty upon the
moral character of an individual, is also scandalous. The matter
alleged, however, must not only be offensive but also irrelevant
to the cause, for however offensive it be, if it is pertinent and
material to the cause, the party has right to plead it. It may
often be necessary to charge false representations, fraud and
immorality, and the pleading will not be open to the objection
of scandal, if the facts justify the charge.”
In Aiyer’s Law Lexicon, Second Edition, page 1727, reference has
been made to Millington v. Loring 50 LJQB 214 wherein it was held:
“A pleading is said to be ‘scandalous’ if it alleges anything
unbecoming the dignity of the court to hear or is contrary to
good manners or which charges a crime immaterial to the issue.
But the statement of a scandalous fact that is material to the
issue is not a scandalous pleading.”
18. In Baradakanta Mishra v. Registrar of Orissa High Court (supra),
Palekar, J. referred to the definition of the term ‘criminal contempt’ and
observed:
“It will be seen that the terminology used in the definition is
borrowed from the English Law of Contempt and embodies
concepts which are familiar to that Law which, by and large,
was applied in India. The expressions “scandalize”, “lowering
the authority of the Court”, “interference”, “obstruction” and
“administration of justice” have all gone into the legal currency
of our sub-continent and have to be understood in the sense in
which they have been so far understood by our Courts with the
aid of the English Law, where necessary.”
32
19. In Naramada Bachao Andolan v. Union of India (1999) 8 SCC 308,
Dr. A.S. Anand, C.J., speaking for himself and B.N. Kirpal, J. (as he then
was) observed as under:
“7. We wish to emphasise that under the cover of freedom of
speech and expression no party can be given a licence to
misrepresent the proceedings and orders of the court and
deliberately paint an absolutely wrong and incomplete picture
which has the tendency to scandalise the court and bring it into
disrepute or ridicule. ……….Courts are not unduly sensitive to
fair comment or even outspoken comments being made
regarding their judgments and orders made objectively, fairly
and without any malice, but no one can be permitted to distort
orders of the court and deliberately give a slant to its
proceedings, which have the tendency to scandalise the court or
bring it to ridicule, in the larger interest of protecting
administration of justice.”
(emphasis supplied)
20. In the light of the above, it is to be seen whether the editorial written
by the respondent can be described as an attempt to scandalize the
functioning of CESTAT. A reading of the editorial in its entirety
unmistakably shows that while expressing his appreciation for the steps
taken by the new President of CESTAT to cleanse the administration, the
respondent had highlighted what he perceived as irregularities in the transfer
and postings of some members and appointment of one member. He pointed
out that Shri T.K. Jayaraman was accommodated at Bangalore by
33
transferring Shri K.C. Mamgain from Bangalore to Delhi in less than one
year of his posting and further that the posting of Shri T.K. Jayaraman for a
period of 7 years was against all the norms, more so because he had earlier
worked as Commissioner of Central Excise (Appeals), Bangalore. The
respondent then made a detailed reference to the orders passed by the
particular Bench of CESTAT which were set aside by the High Courts of
Karnataka and Kerala with scathing criticism. This is evident from the
following extracts of the editorial:
“Several orders of the Division Bench of Shri T.K. Jayaraman
came under the watchful eyes of Hon’ble High Courts
particularly of Karnataka High Court. Comments bordering on
strictures were passed in many cases. Severest of the strictures
on any bench of the CESTAT by any High Court were passed,
on the Division Bench order authored by Shri T.K. Jayaraman,
in the case of Commissioner v. McDowell & Co. Ltd. [2005
(186) E.L.T. 145 (Kar.)]. In this case an amount of Rs.99
crores was involved and CESTAT Bangalore had earlier
ordered deposit of Rs.25 crores as condition for waiver of pre-
deposit of balance amount. However, subsequently CESTAT
Bangalore modified its own order and waived even this
condition for deposit of Rs.25 crores [2005 (182) E.L.T. 114
(Tri. – Bang.)].
The Karnataka High Court was shocked and appalled at
the manner in which the CESTAT Bench modified its own
order and was compelled to even state in relation to Division
Bench Order authored by Shri T.K. Jayaraman that the assessee
had managed to obtain the order and it is a clear case of abuse
and misuse of powers by the Tribunal. The Hon’ble Karnataka
High Court in specific words held as under:-
34
“… The order is totally lacking in conforming to the
requirement of Section 35F of the Act…. The
argument of non-interference with an order passed by
the Tribunal with jurisdiction is called in aid only to
safeguard and protect the order which the assessee has
managed to obtain before the Tribunal. ….. An order
which cannot speak for itself, an order which has not
taken into consideration all relevant aspects,
particularly, the statutory requirements of the proviso
to Section 35F of the Act, in my view is an order that
is not at all sustainable. It is a clear case of abuse
and misuse of the powers under the proviso to
Section 35F of the Act.” (Emphasis
supplied]
The High Court was compelled to comment that the
CESTAT, Bangalore granted relief to the assessee on a ground
which was not even pleaded by him. In strong words the High
Court observed that the Tribunal was acting more loyal than the
King in the following words:-
“……The effect of this order is that the Tribunal has
dispensed with the requirement of pre-deposit of total
duty amount of Rs.64 crores as also the penalty
amount of Rs.35 crores without showing any
awareness as to the existence of any undue
hardship to the assessee if the assessee is required
to comply with the provisions of Section 35F and
the proviso and in total disregard of the interest of
the revenue by not providing sufficient safeguard.
In fact, while in the earlier order, it is held that the
appellant has not even pleaded any financial
hardship, in the present order, nothing is
mentioned at all. Here is a typical case of the
Tribunal acting more loyal than the King! ”
[Emphasis
supplied]
35
Under the garb of modification, the CESTAT bench
waived the entire pre-deposit of around Rs.99 crores even when
the interim order passed before had held that the appellant did
not have prima facie case and had suppressed information from
the Department and the same Bench of Tribunal ordered part
pre-deposit of Rs.25 crores as a condition of stay of Rs.99
crores and it was done when the Tribunal has not powers to
review its own order. The High Court took note of such
infirmities and held that –
“… the order is woefully lacking in the Tribunal
having not exhibited its awareness to the
requirements of proviso of Section 35F of the Act .
It is also clear that the Tribunal after having exercised
jurisdiction for the purposes of passing an order for
waiver of pre-deposit under the proviso to Section
35F of the Act cannot modify that order subsequently
like an appellate authority, nor can keep tinkering
with the order as and when applications for
modification of the order are filed.”
(Emphasis supplied]
The CESTAT, Bangalore Bench in the case of Rishi
Polymach Ltd. v. Commissioner [2005 (192) E.L.T. 884 (Tri.-
Bang.)] allowed appeals by assessee and extended Cenvat credit
to the tune of Rs.31 lakhs based on supplementary balance
sheet produced. The Hon’ble Karnataka High Court [2008
(232) E.L.T. 201 (Kar.)] did not approve the Division Bench
order authored by Shri T.K. Jayaraman and held that
acceptance of supplementary balance sheet by the Tribunal was
a grave error. It held –
“10. Without assigning any reason, the Tribunal has
accepted the supplementary balance sheet, which
according to us, the tribunal has committed a grave
error in allowing the appeal by accepting the
supplementary balance sheet.”
11. When the supplementary balance sheet is relied
upon by the respondents, it is for them to show that
36
the goods received were actually received and utilized
in manufacturing the finished products. The
Tribunal has wrongly placed the burden of proof
on the appellant instead of pleading it on the
respondents .” [Emphasis supplied]
Pre-deposit of Rs.320 crores waived for deposit of Rs.1
crore – Case heard without being listed:
In the case of Harsinghar Gutka Pvt. Ltd. v.
Commissioner [2008 (221) E.L.T. 77 (Tri.-Del.)], the CESTAT
Division Bench comprising of S/Shri S.S. Kang and T.K.
Jayaraman granted a waiver of pre-deposit of Rs.320 crores
against deposit of just Rs.1 crore only. This order of waiver of
pre-deposit was also authored by Shri T.K. Jayaraman, Member
(Technical) and related to the clandestine removal of gutka.
The various dimensions of the case and ramifications of the
order were highlighted in our editorial “ Battle for Rs.320
Crores – Mysterious recusal by CESTAT Member – New
Bench orders pre-deposit of Rs.1 Crore” [2008 (229) E.L.T.
A153].
The order of waiver of pre-deposit of Rs.320 crores
passed in this case has been challenged by the Commissioner of
Central Excise, Lucknow before the Allahabad High Court.
The most important aspect of this case is that it was heard and
the Stay Order of Rs.320 crores was passed on a day when the
case was not even listed in the cause list. The CEGAT Enquiry
Committee had recommended that in such cases, the Members
concerned should be made personally responsible and this
recommendation has already been accepted by the Government.
In view of this, the President, CESTAT is expected to initiate
action against the erring Members.
Tribunal persistently ignoring statutory provisions and
High Court rulings:
Coming back to the Hon’ble Karnataka High Court, within
whose jurisdiction the Bangalroe Bench of the CESTAT, is
functioning, the High Court in the case of Commissioner v.
37
United Telecom Ltd. [2006 (198) E.L.T. 12 (Kar.)], while
considering the validity of the full waiver of pre-deposit granted
by the Bangalore bench of the CESTAT [2005 (191) E.L.T.
1056], which included Shri T.K. Jayaraman, Member
(Technical) commented upon the routine manner in which
waiver of pre-deposit are being granted.
The High Court also commented upon the statutory
responsibility of the CESTAT to safeguard the interest of the
revenue, while granting waiver of pre-deposit and observed as
under:
“It is not the lip sympathy of the Tribunal which can
fulfil the statutory requirement of ensuring the
safeguard of the interest of the revenue, but a concrete
order indicating the manner in which the interest of
the revenue is in fact safeguarded by imposing
commensurate conditions.”
The High Court finally held that the Tribunal’s order in
this case was clearly in violation of statute and fit to be
characterized as arbitrary even while drawing reference to its
own observations in McDowell case supra as under:-
“In the present case it is not even the case of the
appellant before the Tribunal that it faces any
financial hardship or has any difficulty in this regard.
Even in the absence of any plea from the appellant
before the Tribunal to this effect, the tribunal ventures
upon to grant total waiver of pre-deposit. It is
undoubtedly yet another instance of as observed by
this court in the case of McDowell & Company
(supra) the Tribunal being more loyal than the king. It
is rather surprising that the Tribunal persists in
ignoring the statutory provisions as contained in the
proviso to Section 129E in passing such order for the
purpose of pre-deposit when the order is passed only
under this proviso and not under any other provision.
The impugned order is clearly a violation of the
statute, fit to be characterized as arbitrary
38
inasmuch as the Tribunal has not shown its awareness
to the aspect of undue hardship if in fact existed or
will be caused to the assessee if the assessee has to
fulfil the statutory requirement of pre-deposit…”
[Emphasis supplied]
Pre-deposit of Rs.440 crores waived without any financial
hardship – High Court rulings again violated:
The Bangalore Bench of the CESTAT comprising of Dr.
S.L. Peeran, Member (J) and Shri T.K. Jayaraman, Member (T)
in the case of Bharti Airtel Ltd. v. Commissioenr of Customs
[2009 (237) E.L.T. 469] has waived the pre-deposit of the entire
amount of Rs.440 crores on the ground that the appellant has
strong prima facie case. In this case, the order of waiver has
been authored by Shri T.K. Jayaraman, but it does not contain
any reference to any financial hardship either pleaded or
considered by the Bench. Surprisingly this order is very
sketchy and observations, discussion and decision of the Bench
are in just 11 printed lines while the case involved more than
Rs.440 crores.
The Karnataka High Court has repeatedly held in the
cases of McDowell & Co. Ltd. and United Telecom Ltd. that it
is the statutory obligation of the CESTAT to safeguard the
interest of the revenue and therefore, unless the assessee pleads
financial hardship with regard to the compliance with pre-
deposit and the assessee is unable to make pre-deposit, it cannot
be said that assessee is facing financial hardship warranting
dispensation of pre-deposit. The order passed in the case of
Bharati Airtel Ltd. by the Bangalore Bench is not only in
violation of the dictum of the Karnataka High Court, but also
contemptuous as the Bangalore Bench of the CESTAT is
refusing to follow the law laid down by the Karnataka High
Court, which is the jurisdictional High Court for CESTAT,
Bangalore.
Asked for “three” got “thirteen”:
39
Recently, the Central Excise Department, Mangalore has
filed an appeal against the order passed by the Bangalore Bench
of the CESTAT, again comprising of Dr. S.L. Peeran, Member
(J) and Shri T.K. Jayaraman, Member (T) in the case of Alvares
& Thomas [2009 (13) S.T.R. 516] on the plea that the assessee
has preferred the appeal to the Tribunal only on the question of
limitation, whereas the Tribunal has decided the appeal in
favour of the assessee on merits. The Hon’ble Bench of the
Supreme Court comprising of Hon’ble Mr. Justice S.H.
Kapadia and Hon’ble Mr. Justice Aftab Alam in Civil Appeal
D. No.5566 of 2009, passed the following order on 27.04-2009:
“Delay condoned.
Issue notice to the extent mentioned below.
Since the assessee had preferred an appeal before
the Tribunal only on the question of limitation, we
do not see any reason why the Tribunal has
decided the assessee’s appeal on the merits of the
case.”
[Emphasis supplied]
Kerala High Court also dissatisfied with Bangalore Bench
Orders:
In the case of Electronic Control Corporation v.
Commissioner [2009 (235) E.L.T. 417 (Ker.)], the Kerala High
Court too has recorded its annoyance with the order of the
CESTAT Bangalore as reported in [2006 (197) E.L.T. 291 (Tri.
– bang.)]. In this case also, the order for the Bench was
authored by Shri T.K. Jayaraman, Member (T) and as per the
Kerala High Court, the CESTAT did not consider the evidences
relied on by the Department and burden of proof was held as
not discharged by the Department. The High Court expressed
its “thorough displeasure” in its order in the following words –
“ Since we are thoroughly dissatisfied with the
order of the Tribunal which was issued without
reference to the materials gathered by the department
40
and based on which adjudication was made, we set
aside the order of the Tribunal with direction to the
Tribunal to rehear the matter…”
[Emphasis
supplied]
The High Court expressed surprise over the Tribunal
order by holding that –
“ Strangely, the Tribunal has not considered any
evidence relied on by the department like the
statements recorded from the employees,
admission made by the proprietrix at the time of
search and the evidence collected from the Bank
pertaining to business transactions . When prima
facie evidence is established by the department,
particularly with reference to banking transactions, it
is for the respondent-assessee to explain why the
transactions should not be treated as pertaining to
business. The Tribunal failed to note that reasonable
inferences can be drawn from evidence collected by
the department, more so when the respondent fails to
explain the transactions brought on record.
Strangely, the employees statements which have
evidentiary value have been ignored by the
Tribunal .”
[Emphasis
supplied]
Over-ruling the order of the CESTAT, Bangalore Bench
in the case of Middas Pre-cured Tread Pvt. Ltd. v.
Commissioner [2006 (200) E.L.T. 423 (Tri. – Bang.)], the
Kerala High Court in 2009 (236) E.L.T. 26 (Ker.) held that the
Tribunal, instead of considering scope of notifications with
reference to statutory provisions, under which such
notifications are issued, considered the scope of statutory
provisions with reference to notifications issued. The Court
held that –
41
“We do not know on what basis the Tribunal has held
that prospectively has no relevance in this case…the
Tribunal or even the High Courts have no power to
grant retrospectively for a notification in the
interpretation process.”
21. Although, the petitioner has tried to project the editorial as a piece of
writing intended to demean CESTAT as an institution and scandalize its
functioning but we do not find anything in it which can be described as an
attempt to lower the authority of CESTAT or ridicule it in the eyes of the
public. Rather the object of the editorial was to highlight the irregularities in
the appointment, posting and transfer of the members of CESTAT and
instances of the abuse of the quasi judicial powers. What was incorporated
in the editorial was nothing except the facts relating to manipulative transfer
and posting of some members of CESTAT and substance of the orders
passed by the particular Bench of CESTAT, which were set aside by the
High Courts of Karnataka and Kerala. Even, this Court was constrained to
take cognizance of the unusual order passed by CESTAT of which Shri T.K.
Jayaraman was a member whereby the appeal of the assessee was decided
on merits even though the Tribunal was required to examine the question of
limitation only. By writing the editorial which must have caused
embarrassment to functionaries of the Central Government and CESTAT
and even some members of the petitioner-Association but that cannot be
42
dubbed as an attempt to scandalize CESTAT as a body or interfere with the
administration of justice. What the respondent projected was nothing but
true state of the functioning of CESTAT on administrative side and to some
extent on judicial side. By doing so, he had merely discharged the
constitutional duty of a citizen enshrined in Article 51A(h). It is not the
petitioner’s case that the facts narrated in the editorial regarding transfer and
posting of the members of CESTAT are incorrect or that the respondent had
highlighted the same with an oblique motive or that the orders passed by
Karnataka and Kerala High Courts to which reference has been made in the
editorial were reversed by this Court. Therefore, it is not possible to record
a finding that by writing the editorial in question, the respondent has tried to
scandalize the functioning of CESTAT or made an attempt to interfere with
the administration of justice.
22. The matter deserves to be examined from another angle. The
substituted Section 13 represents an important legislative recognition of one
of the fundamentals of our value system i.e. truth. The amended section
enables the Court to permit justification by truth as a valid defence in any
contempt proceeding if it is satisfied that such defence is in public interest
and the request for invoking the defence is bonafide. In our view, if a
43
speech or article, editorial, etc. contains something which appears to be
contemptuous and this Court or the High Court is called upon to initiate
proceedings under the Act and Articles 129 and 215 of the Constitution, the
truth should ordinarily be allowed as a defence unless the Court finds that it
is only a camouflage to escape the consequences of deliberate or malicious
attempt to scandalize the court or is an interference with the administration
of justice. Since, the petitioner has not even suggested that what has been
mentioned in the editorial is incorrect or that the respondent has presented a
distorted version of the facts, there is no warrant for discarding the
respondent’s assertion that whatever he has written is based on true facts and
the sole object of writing the editorial was to enable the concerned
authorities to take corrective/remedial measures.
23. At this juncture, it will be apposite to notice the growing acceptance
of the phenomenon of whistleblower. A whistleblower is a person who
raises a concern about wrongdoing occurring in an organization or body of
people. Usually this person would be from that same organization. The
revealed misconduct may be classified in many ways; for example, a
violation of a law, rule, regulation and/or a direct threat to public interest,
such as fraud, health/safety violations and corruption. Whistleblowers may
44
make their allegations internally (for example, to other people within the
accused organization) or externally (to regulators, law enforcement agencies,
to the media or to groups concerned with the issues). Most whistleblowers
are internal whistleblowers , who report misconduct on a fellow employee or
superior within their company. One of the most interesting questions with
respect to internal whistleblowers is why and under what circumstances
people will either act on the spot to stop illegal and otherwise unacceptable
behavior or report it. There is some reason to believe that people are more
likely to take action with respect to unacceptable behavior, within an
organization, if there are complaint systems that offer not just options
dictated by the planning and controlling organization, but a choice of options
for individuals, including an option that offers near absolute confidentiality.
However, external whistleblowers report misconduct on outside persons or
entities. In these cases, depending on the information's severity and nature,
whistleblowers may report the misconduct to lawyers, the media, law
enforcement or watchdog agencies, or other local, state, or federal agencies.
In our view, a person like the respondent can appropriately be described as a
whistleblower for the system who has tried to highlight the malfunctioning
of an important institution established for dealing with cases involving
revenue of the State and there is no reason to silence such person by
45
invoking Articles 129 or 215 of the Constitution or the provisions of the Act.
24. We agree with the learned counsel for the respondent that this petition
lacks bonafide and is an abuse of the process of the Court. The petitioner is
a body of professionals who represent the cause of their clients before
CESTAT and may be other Tribunals and authorities. They are expected to
be vigilant and interested in transparent functioning of CESTAT. However,
instead of doing that, they have come forward to denounce the editorial and
in the process misled the Attorney General of India in giving consent by
suppressing the factum of appointment of Inquiry Committee by the
President, CESTAT. We are sorry to observe that a professional body like
the petitioner has chosen wrong side of the law.
25. In the result, the petition is dismissed. For filing a frivolous
petition, the petitioner is saddled with cost of Rs.2,00,000/-, of which
Rs.1,00,000/- shall be deposited with the Supreme Court Legal Services
Committee and Rs.1,00,000/- shall be paid to the respondent.
….………………….…J.
[G.S. Singhvi]
…..…..………………..J.
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[Asok Kumar Ganguly]
New Delhi
August 13, 2010
47