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

JUDGMENT

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

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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

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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

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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

soles of the shoes is a trade practice as per

CESTAT order - Need for CBI enquiry

23-07-2008 Gold Smuggling - Carrying of gold in

soles of the shoes is a trade practice as per

CESTAT order - Need for CBI enquiry

26-07-2008 Change of "Pronounced Orders" by

CESTAT Members - Open Court

handwritten order directing deposit of

Rs.15 lakhs changed to Rs.5 lakhs -

Department's ROM application pointing

out this discrepancy, repeatedly dismissed

by CESTAT

09-08-2008 CESTAT : Changing of orders - Direction

for deposit of Rs.50 lakhs changed to

Rs.50,000 in a Customs case booked by

DRI for "mis-declaration" of imports from

China involving Rs.2.07 crores - Need for

CBI Enquiry

12-08-2008 CESTAT, Settlement Commission,

Revisionary Authority and Govt.

Litigation in revenue evasion cases

involving high revenue - Request for

personal meeting

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21.10.2008 Appointment of Judicial Members to

CESTAT - Serious irregularities and

tampering with the records - Mis-

declaration as to eligibility by Mr. M.V.

Ravindran, Member (Judicial), CESTAT.

28-02-2009 CESTAT : Changing of orders - Direction

for deposit of Rs.50 lakhs changed to

Rs.50,000 in a Customs case booked by

DRI involving Rs.2.07 crores - Further

revelations and Evidences - Need for CBI

Enquiry strengthens

LETTERS TO THE REVENUE SECRETARY

Letter Date Subject

05-09-2008 CESTAT : Proposal for confirmation of

Shri M.V. Ravindran, Member (J) and Shri

K.K. Agarwal, Member (T) may be kept in

abeyance, pending verification of

allegations and irregularities committed by

them - Initiation of disciplinary

proceedings for their removal.

22-10-2008 Appointment of Judicial Members to

CESTAT - Serious irregularities and

tampering with the records - Mis-

declaration as to eligibility by Mr. M.V.

Ravindran, Member (Judicial), CESTAT

10-11-2008 CESTAT - Non-functioning of the

Chennai Bench of the CESTAT since

3-11-2008

19-11-2008 CESTAT - Unauthorised and manipulated

Tour Notes/Tours by Ms. Jyoti

Balasundaram, Vice President - Need for

Vigilance Enquiry

14-02-2009 Appeal by Revenue Department in S.C. -

95% of appeal lost - Departments

representation at High Court still worse -

Need for remedial measures

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02-03-2009 CESTAT : Changing of orders - Direction

for deposit of Rs.50 lakhs changed to Rs.

50,000 in a Customs case booked by DRI

involving Rs. 2.07 crores - Further

revelations and Evidences - Need for CBI

Enquiry strengthens

LETTERS TO THE HON'BLE PRESIDENT, CESTAT

Letter Date Subject

30-08-2008 Change of "Pronounced Orders" by

CESTAT Members - Open Court

handwritten order directing deposit of

Rs.15 lakhs changed to Rs.5 lakhs -

Department's ROM Application pointing

out this discrepancy, repeatedly dismissed

by CESTAT

01-09-2008 CESTAT - Changing of orders - Direction

for deposit of Rs.50 lakh changed to

Rs.50,000 in a Customs case booked by

DRI for "mis-declaration" of imports from

China involving Rs.2.07 crores - Need for

CBI Enquiry

07-10-2008 Manner of listing of matters in the Cause

List

11-10-2008 Need for uniform practice for dealing with

Mention matters by different Zonal

Benches of the CESTAT

05-05-2009 Annual Physical Checking of pending

Appeals and Applications - Misplacement

of Appeal files after grant of Stay in heavy

matters

22-05-2009 Pronouncement of reverse orders within

reasonable period - Need for re-hearing

when order not pronounced within 4

months - Bombay High Court decision

08-06-2009 Pronouncement of "Reserved Order" -

Listing in cause list.

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13-07-2009 Complaint against Shri S. Chandran,

Registrar, CESTAT for non-compliance of

Miscellaneous Order No.412/2007-

SM(BR), dated 4-10-2007 passed by

Justice R.K. Abhichandani, and misusing

of authority as First Appellate Authority

under RTI Act, by suppressing/fabricating

information

31-08-2009 Disciplinary action against Shri S.K.

Verma, Assistant Registrar, CESTAT as

per the directions of the Presiding Officer

of Debt Recovery Tribunal-II, Delhi and

for other complaint and lapses

02-09-2009 Non-maintenance of records for

Supplementary Cause Lists issued by

Chennai Bench of the CESTAT

10-09-2009 Improper and illegal transfer of the

Customs Appeal Nos.C/112 & 139/2009

from Division Bench to Single Member

Bench in violation of provisions of

Customs Act and CESTAT (Procedure)

Rules, 1982 - Need for Inquiry by an

Independent Agency.

16-09-2009 Service Tax appeals relating to valuation

and rate of tax by Single Member Bench in

violation of Section 86(7) of Finance Act,

1994

19-09-2009 Need for incorporating the amount of duty,

penalty and fine in the orders passed by

the CESTAT

22-09-2009 Act of insubordination by Asst. Registrar

by commenting on exercise of power by

President as violating rules and exceeding

powers - Need for disciplinary action

23-09-2009 Information about antedating of orders and

delayed release of orders, particularly of

CESTAT Bangalore and of Single

Member Bench of the CESTAT, New

Delhi

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05-10-2009 Report of despatch of CESTAT Orders -

Non-Compliance By CESTAT, Mumbai

16-10-2009 Information about antedating of orders and

delayed release of orders, particularly by

Bangalore Bench of CESTAT

16-10-2009 Lodging of Police Complaint for missing

records from CESTAT, New Delhi

23-10-2009 Delay in dispatch of the orders - Non

submission of weekly report for dispatch

of orders by the Regional Benches -

Inaction by the Registrar and Deputy

Registrar at CESTAT Headquarters, New

Delhi.

26-10-2009 Complaint against Shri P.K. Das, Hon'ble

Member (Judicial), CESTAT, New Delhi

08-01-2010 Strengthening the CESTAT by providing

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

for 2001 - missing

09-12-2008 Issuing of letters without File Number or

letter number or the dispatch diary number

27-01-2009 Withholding of Supreme Court remand

orders by the CESTAT Registry, Mumbai

- Request for disciplinary action.

04-11-2009 Fault of CESTAT Registry, Mumbai in not

placing before the Bench the proof of

deposit of pre-deposit amount

14-11-2009 Tracing out of case records of Kozy Silks

(P) Ltd.

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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

pronounced orders and issued orders -

Strengthening of Departmental

Representation to safeguard revenue -

Reg.

LETTERS TO CENTRAL BOARD OF EXCISE & CUSTOMS

Letter Date Subject

02-03-2009 CESTAT : Changing of orders - Direction

for deposit of Rs.50 lakhs changed to

Rs.50,000 in a Customs case booked by

DRI involving Rs. 2.07 crores - Further

revelations and Evidences - Need for CBI

Enquiry strengthens

06-06-2009 Change in Pronounced Orders

13-06-2009 Appeals under Section 35G of the Central

Excise Act to be filed within 180 days -

High Courts have no power to condone the

delay - Latest Supreme Court decision in

the case of Chaudharana Steels (P) Ltd. v.

Commissioner of Central Excise,

Allahabad - Need for suitably modifying

the CBE & C Circular No.888/8/2009-CX,

dated 21-5-09

08-08-2009 Change of pronounced orders by CESTAT

Members - Whereabouts of complaint

dated 4-8-2008 made to the Finance

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

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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,

162nd 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

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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

CESTAT. Letter dated 26th 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

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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:

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"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

Law Dictionary, 8th 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

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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

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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

Labels------Article 19(1)(a) of the Constitution,  contempt proceedings under Article 129 of the Constitution