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
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
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
5
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
6
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.
7
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
8
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.
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
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
10
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
13
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
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
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
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
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
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.
46
[Asok Kumar Ganguly]
New Delhi
August 13, 2010
Labels------Article 19(1)(a) of the Constitution, contempt proceedings under Article 129 of the Constitution
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