TMI Blog2010 (8) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... tment 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. - Petition for contempt of court dismissed with cost of ₹ 2,00,000 - 9 OF 2009 and 15 OF 1997 - - - Dated:- 13-8-2010 - 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 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 pointi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs - Direction for deposit of ₹ 50 lakhs changed to ₹ 50,000 in a Customs case booked by DRI involving ₹ 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 ₹ 15 lakhs changed to ₹ 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 ₹ 50 lakh changed to ₹ 50,000 in a Customs case booked by DRI for mis-declaration of imports from China involving ₹ 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 P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers, 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 rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich 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: 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etary, 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioning 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst 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 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sist, 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- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 ham ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh 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: 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 conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial proceeding; or (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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 scandalize 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 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, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 64 crores as also the penalty amount of ₹ 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] Under the garb of modification, the CESTAT bench waived the entire pre-deposit of around ₹ 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 ₹ 25 crores as a condition of stay of ₹ 99 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecusal by CESTAT Member - New Bench orders pre-deposit of ₹ 1 Crore [2008 (229) E.L.T. A153]. The order of waiver of pre-deposit of ₹ 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 ₹ 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. 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 inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 ₹ 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 : Recently, the Central Excise Department, Mangalore has file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efence is in public interest and the request for invoking the defence is bonafide. In our view, if a 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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