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TMI Blog2010 (8) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 CE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anaged 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: "At this stage, the terms of reference for inquiry by the Committee sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dalized 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest 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 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 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke 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 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our justice system. It is a criticism which 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: "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 resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied] 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] 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. United Telecom Ltd. [2006 (198) E.L.T. 12 (Kar.)], while considering the validity of the full waiver of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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": R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent-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 - "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 writi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is satisfied that such defence 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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