1998 (11) TMI 126 - SC - Income Tax

Whether a private person or the subordinate court, is only an informant and does not have the status of a litigant in the contempt of court case? Held that - The first respondent, although he received the pseudonymous complaint of November 15, 1997, seems to have written a letter to the so called sender of the complaint only on January 12, 1998, and that too asking only for a confirmation whether the complaint was made by that person. When he wrote the letter of December 30, 1997, he had not even checked the veracity of the complaint. Thereafter, although the first respondent had not received any response to his letter of January 12, 1998, he did not hesitate to address the letter of February 3, 1998, to the President of the Tribunal. In our view this kind of conduct and that too on the part of the Law Secretary, who is expected to maintain the independence of the Income-tax Appellate Tribunal and not interfere with its judicial functioning, amounts to gross contempt of court. It is a deliberate attempt on his part to question the judicial functioning of the Tribunal coming as it does from a person of his rank. It is rightly perceived by the President as well as the two concerned Members of the Tribunal as a threat to their independent functioning in the course of deciding appeals coming up before them. The first respondent has offered his apology, to us. However, looking to all the circumstances of the present case we cannot accept the apology offered. He has travelled far beyond exercising administrative control over the Tribunal.

Issues Involved:
1. Validity of the letter dated November 5, 1996, modifying the powers of the President of the Income-tax Appellate Tribunal.
2. Alleged judicial impropriety in the case of Neerja Birla v. Asst. CIT.
3. Interference with the judicial functioning of the Income-tax Appellate Tribunal by the Law Secretary.
4. Jurisdiction of the Supreme Court to punish for contempt in relation to the Income-tax Appellate Tribunal.
5. Conduct of the Law Secretary in dealing with the pseudonymous complaint.

Issue-wise Detailed Analysis:

1. Validity of the letter dated November 5, 1996:
A public interest writ petition was filed challenging the validity of a letter dated November 5, 1996, which purported to modify the powers of the President of the Income-tax Appellate Tribunal regarding the posting and transfer of its members. The petitioners contended that they were interested in the fair and impartial administration of income-tax law and in upholding the independence of the Income-tax Appellate Tribunal. The High Court initially restrained the respondents from interfering with the President's powers, and this interim order was confirmed by the Supreme Court on March 31, 1997.

2. Alleged judicial impropriety in the case of Neerja Birla v. Asst. CIT:
The issue arose from an order dated October 23, 1997, passed by a Bench of the Income-tax Appellate Tribunal, which denied the assessee a benefit amounting to Rs. 1,50,00,000. The President of the Tribunal received a letter from the Law Secretary alleging that two contradictory orders were passed in the same matter by the two members of the Bench. The Judicial Member had initially prepared a draft order in favor of the assessee, but after discussion, agreed with the Accountant Member's view, resulting in a final order favoring the Revenue. Both members clarified that there was only one final order dated October 23, 1997, signed by both.

3. Interference with the judicial functioning of the Income-tax Appellate Tribunal by the Law Secretary:
The Law Secretary's letters dated December 30, 1997, and February 3, 1998, were considered by the President of the Tribunal as interference with the judicial decision-making process. The letters demanded an inquiry and report on the alleged judicial impropriety, which the Tribunal members viewed as gross interference in their judicial duties. The Supreme Court held that questioning the judicial decision and demanding action against the members constituted a clear threat to their independent functioning and undermined confidence in the Tribunal's judicial functioning.

4. Jurisdiction of the Supreme Court to punish for contempt in relation to the Income-tax Appellate Tribunal:
The Supreme Court reaffirmed its jurisdiction under Article 129 of the Constitution to punish for contempt not only of itself but also of all courts and Tribunals subordinate to it. The Court emphasized its supervisory jurisdiction over all courts in India, including the Income-tax Appellate Tribunal, and held that it has the inherent power to protect the judicial functioning of subordinate courts and Tribunals from interference.

5. Conduct of the Law Secretary in dealing with the pseudonymous complaint:
The Law Secretary received a pseudonymous complaint alleging judicial impropriety in the Tribunal's decision. Without verifying the authenticity of the complaint or the facts, he wrote peremptory letters to the President of the Tribunal demanding an inquiry and report. The Supreme Court found the Law Secretary's conduct, including the offensive tone of the letters and the failure to follow proper procedures, to be grossly contemptuous. The Court held that his actions amounted to a deliberate attempt to interfere with the judicial functioning of the Tribunal.

Conclusion:
The Supreme Court held the Law Secretary guilty of contempt of court for his conduct in interfering with the judicial functioning of the Income-tax Appellate Tribunal. The Court imposed a fine of Rs. 2,000 as punishment, considering that the Law Secretary had since retired and was no longer in a position to inflict further damage. The Court emphasized the need to protect the independence and integrity of the judicial process and the proper administration of justice.

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