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

J U D G M E N T

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 pointing out  

that  the  respondent  had  published  objectionable  editorials  in  1996  (86)  

Excise Law Times pages A169 to A179, 1996 (87) Excise Law Times pages  

A59 to A70 and 1997 (94) Excise Law Times pages A65 to A82 containing  

half truths, falsehoods and exaggerated versions of the alleged deficiencies  

and  irregularities  in  the  functioning  of  the  Tribunal,  initiated  contempt  

proceedings against the respondent which came to be registered as Contempt  

Petition (Criminal) No.15 of 1997.  On 25.8.1998, the respondent filed an  

undertaking, the relevant portions of which are reproduced below:

“I  realize  that  my  approach  and  wordings  in  the  Impugned  Editorials of ELT have given the impression of scandalising or  lowering the authority of CEGAT.  I state that I had no such  intention as I had undertaken the exercise in good faith and in  public  interest.   I  sincerely  regret  the  writing  of  the  said  Editorials which have caused such an impression.

That I have been advised by my senior counsel – Mr. Shanti  Bhushan  that  in  future  whenever  there  are  any  serious  complaints  regarding  the  functioning  of  CEGAT,  the  proper  course would be to first bring those matters to the notice of the  Chief Justice of India, and/or the Ministry of Finance and await  

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a  response  or  corrective  action  for  a  reasonable  time  before  taking any other action.  I undertake to the court to abide by this  advise of my counsel in future.”

After taking cognizance of the same, the Court passed the following  

order:-

“Mr.  Shanti  Bhushan,  learned  counsel  for  the  respondent  (alleged contemnor) tenders a statement in writing signed by  the  respondent.   We  accept  the  regret  tendered  by  the  respondent  in  the  said  statement.   We  also  accept  the  undertaking  to  Court  given  by  the  respondent  in  the  said  statement.  Having regard to the aforesaid, the contempt notice  is discharged.  There will be no order as to costs.

We  express  our  gratitude  to  Mr.  T.R.  Andhyarujina  who  as  assisted the Court at our request.”

3. During  the  pendency  of  the  aforementioned  contempt  case,  the  

respondent had written detailed letters dated 2.6.2008, 7.7.2008, 23.7.2008,  

26.7.2008, 9.8.2008 and 12.8.2008 to the Finance Minister, Government of  

India  highlighting  specific  cases  of  irregularities,  malfunctioning  and  

corruption  in  the  Central  Excise,  Customs  and  Service  Tax  Appellate  

Tribunal  (CESTAT).   After  the  notice  of  contempt  was  discharged,  the  

respondent wrote two more letters dated 21.10.2008 and 28.2.2009 to the  

Finance  Minister  on  the  same  subject  and  also  pointed  out  how  the  

appointment and posting of Shri T.K. Jayaraman, Member CESTAT were  

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irregular.  He drew the attention of the addressee to the fact that some of the  

orders pronounced by CESTAT had been changed.  He wrote similar letters  

to the Revenue Secretary, President, CESTAT, Registrar, CESTAT and the  

Central Board of Excise and Customs.  The particulars of these letters as  

contained in the reply affidavit filed by the respondent are as under:

LETTERS TO THE FINANCE MINISTER

Letter Date Subject 02-06-2008 CESTAT – Member-Advocate Nexus 07-07-2008 Gold  Smuggling  –  Carrying  of  gold  in  

soles of the shoes is a trade practice as per  CESTAT order – Need for CBI enquiry

23-07-2008 Gold  Smuggling  –  Carrying  of  gold  in  soles of the shoes is a trade practice as per  CESTAT order – Need for CBI enquiry

26-07-2008 Change  of  “Pronounced  Orders”  by  CESTAT  Members  –  Open  Court  handwritten  order  directing  deposit  of  Rs.15  lakhs  changed  to  Rs.5  lakhs  –  Department’s  ROM  application  pointing  out this discrepancy, repeatedly dismissed  by CESTAT

09-08-2008 CESTAT : Changing of orders – Direction  for  deposit  of  Rs.50  lakhs  changed  to  Rs.50,000  in  a  Customs  case  booked  by  DRI for “mis-declaration” of imports from  China involving Rs.2.07 crores – Need for  CBI Enquiry

12-08-2008 CESTAT,  Settlement  Commission,  Revisionary  Authority  and  Govt.  Litigation  in  revenue  evasion  cases  involving  high  revenue  –  Request  for  personal meeting

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21.10.2008 Appointment  of  Judicial  Members  to  CESTAT  –  Serious  irregularities  and  tampering  with  the  records  –  Mis- declaration  as  to  eligibility  by  Mr.  M.V.  Ravindran, Member (Judicial), CESTAT.

28-02-2009 CESTAT : Changing of orders – Direction  for  deposit  of  Rs.50  lakhs  changed  to  Rs.50,000  in  a  Customs  case  booked  by  DRI  involving  Rs.2.07  crores  –  Further  revelations and Evidences – Need for CBI  Enquiry strengthens

LETTERS TO THE REVENUE SECRETARY

Letter Date Subject 05-09-2008 CESTAT  :  Proposal  for  confirmation  of  

Shri M.V. Ravindran, Member (J) and Shri  K.K. Agarwal, Member (T) may be kept in  abeyance,  pending  verification  of  allegations and irregularities committed by  them  –  Initiation  of  disciplinary  proceedings for their removal.

22-10-2008 Appointment  of  Judicial  Members  to  CESTAT  –  Serious  irregularities  and  tampering  with  the  records  –  Mis- declaration  as  to  eligibility  by  Mr.  M.V.  Ravindran, Member (Judicial), CESTAT

10-11-2008 CESTAT  –  Non-functioning  of  the  Chennai  Bench  of  the  CESTAT  since  3-11-2008

19-11-2008 CESTAT – Unauthorised and manipulated  Tour  Notes/Tours  by  Ms.  Jyoti  Balasundaram, Vice President – Need for  Vigilance Enquiry

14-02-2009 Appeal by Revenue Department in S.C. –  95%  of  appeal  lost  –  Departments  representation at High Court still worse –  Need for remedial measures

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02-03-2009 CESTAT : Changing of orders – Direction  for deposit of Rs.50 lakhs changed to Rs.  50,000 in a Customs case booked by DRI  involving  Rs.  2.07  crores  –  Further  revelations and Evidences – Need for CBI  Enquiry strengthens

LETTERS TO THE HON’BLE PRESIDENT, CESTAT

Letter Date Subject 30-08-2008 Change  of  “Pronounced  Orders”  by  

CESTAT  Members  –  Open  Court  handwritten  order  directing  deposit  of  Rs.15  lakhs  changed  to  Rs.5  lakhs  –  Department’s  ROM  Application  pointing  out this discrepancy, repeatedly dismissed  by CESTAT

01-09-2008 CESTAT - Changing of orders – Direction  for  deposit  of  Rs.50  lakh  changed  to  Rs.50,000  in  a  Customs  case  booked  by  DRI for “mis-declaration” of imports from  China involving Rs.2.07 crores – Need for  CBI Enquiry

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

11-10-2008 Need for uniform practice for dealing with  Mention  matters  by  different  Zonal  Benches of the CESTAT

05-05-2009 Annual  Physical  Checking  of  pending  Appeals and Applications – Misplacement  of Appeal files after grant of Stay in heavy  matters

22-05-2009 Pronouncement  of  reverse  orders  within  reasonable  period  –  Need  for  re-hearing  when  order  not  pronounced  within  4  months – Bombay High Court decision

08-06-2009 Pronouncement  of  “Reserved  Order”  –  Listing in cause list.

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13-07-2009 Complaint  against  Shri  S.  Chandran,  Registrar, CESTAT for non-compliance of  Miscellaneous  Order  No.412/2007- SM(BR),  dated  4-10-2007  passed  by  Justice  R.K.  Abhichandani,  and misusing  of  authority  as  First  Appellate  Authority  under RTI Act, by suppressing/fabricating  information

31-08-2009 Disciplinary  action  against  Shri  S.K.  Verma,  Assistant  Registrar,  CESTAT  as  per the directions of the Presiding Officer  of  Debt  Recovery  Tribunal-II,  Delhi  and  for other complaint and lapses

02-09-2009 Non-maintenance  of  records  for  Supplementary  Cause  Lists  issued  by  Chennai Bench of the CESTAT

10-09-2009 Improper  and  illegal  transfer  of  the  Customs  Appeal  Nos.C/112  &  139/2009  from  Division  Bench  to  Single  Member  Bench  in  violation  of  provisions  of  Customs  Act  and  CESTAT  (Procedure)  Rules,  1982  –  Need  for  Inquiry  by  an  Independent Agency.

16-09-2009 Service Tax appeals  relating to valuation  and rate of tax by Single Member Bench in  violation of Section 86(7) of Finance Act,  1994

19-09-2009 Need for incorporating the amount of duty,  penalty  and fine in  the  orders  passed by  the CESTAT

22-09-2009 Act of insubordination by Asst. Registrar  by commenting  on exercise  of  power by  President as violating rules and exceeding  powers – Need for disciplinary action  

23-09-2009 Information about antedating of orders and  delayed  release  of  orders,  particularly  of  CESTAT  Bangalore  and  of  Single  Member  Bench  of  the  CESTAT,  New  Delhi

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05-10-2009 Report of despatch of CESTAT Orders –  Non-Compliance By CESTAT, Mumbai

16-10-2009 Information about antedating of orders and  delayed release  of  orders,  particularly  by  Bangalore Bench of CESTAT

16-10-2009 Lodging of Police Complaint for missing  records from CESTAT, New Delhi

23-10-2009 Delay  in  dispatch  of  the  orders  –  Non  submission of weekly report  for dispatch  of  orders  by  the  Regional  Benches  –  Inaction  by  the  Registrar  and  Deputy  Registrar at CESTAT Headquarters,  New  Delhi.

26-10-2009 Complaint against Shri P.K. Das, Hon’ble  Member (Judicial), CESTAT, New Delhi

08-01-2010 Strengthening  the  CESTAT by providing  facilities to the Members in the Tribunal

LETTERS TO REGISTRAR, CESTAT

Letter Date Subject 23-08-2008 Listing of matter in two different courts 09-12-2008 Files  for  Tour  orders  and Roaster  orders  

for 2001 – missing 09-12-2008 Issuing of letters without File Number or  

letter number or the dispatch diary number 27-01-2009 Withholding  of  Supreme  Court  remand  

orders by the CESTAT Registry, Mumbai  – Request for disciplinary action.

04-11-2009 Fault of CESTAT Registry, Mumbai in not  placing  before  the  Bench  the  proof  of  deposit of pre-deposit amount

14-11-2009 Tracing out of case records of Kozy Silks  (P) Ltd.

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LETTER TO THE CDR, CESTAT, NEW DELHI

Letter Date Subject 01-08-2009 Cross-Appeals to be heard together 06-08-2009 CESTAT Orders – Discrepancies between  

pronounced  orders  and  issued  orders  –  Strengthening  of  Departmental  Representation  to  safeguard  revenue  –  Reg.

LETTERS TO CENTRAL BOARD OF EXCISE & CUSTOMS

Letter Date Subject 02-03-2009 CESTAT : Changing of orders  - Direction  

for  deposit  of  Rs.50  lakhs  changed  to  Rs.50,000  in  a  Customs  case  booked  by  DRI involving  Rs.  2.07  crores  –  Further  revelations and Evidences – Need for CBI  Enquiry strengthens  

06-06-2009 Change in Pronounced Orders 13-06-2009 Appeals under Section 35G of the Central  

Excise Act to be filed within 180 days  -  High Courts have no power to condone the  delay – Latest Supreme Court decision in  the case of Chaudharana Steels (P) Ltd. v.  Commissioner  of  Central  Excise,  Allahabad – Need for suitably modifying  the CBE & C Circular No.888/8/2009-CX,  dated 21-5-09

08-08-2009 Change of pronounced orders by CESTAT  Members  –  Whereabouts  of  complaint  dated  4-8-2008  made  to  the  Finance  Minister.

4. Since no one seems to have taken cognizance of the letters written by  

the  respondent,  he  wrote  the  editorial  in  which  he  commended  the  

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administrative  and  judicial  reforms  initiated  by  the  new  President  of  

CESTAT  and,  at  the  same  time,  highlighted  how  some  members  of  

CESTAT managed their stay at particular place.  He also made a mention of  

what he perceived as irregularities in the appointment and posting of Shri  

T.K. Jayaraman, erstwhile Commissioner  of Central Excise,  Bangalore as  

member  CESTAT.   The  respondent  then  referred  to  some  of  the  orders  

passed by the Bench comprising Shri T.K. Jayaraman, which were adversely  

commented  upon by the High Courts of  Karnataka and Kerala.   He also  

made a mention of the irregularities in the functioning of the Registry of  

CESTAT.    

5. The  petitioner,  whose  members  are  said  to  be  appearing  before  

Bangalore, Chennai, Bombay, Delhi, Ahmedabad and Calcutta Benches of  

CESTAT,  took  up  the  cause  of  Shri  T.K.  Jayaraman  and  submitted  

complaint  dated  11.6.2009  to  the  President  of  CESTAT  accusing  the  

respondent of trying to scandalize the functioning of CESTAT and lower its  

esteem in the eyes of the public.  By an order dated 16.7.2009, the President,  

CESTAT appointed  a  two-member  committee  to  look into  the  grievance  

made by the petitioner as also the allegations contained in the editorial.  The  

terms of reference made to the Inquiry Committee are as follows:  

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“At  this  stage,  the  terms  of  reference  for  inquiry  by  the  Committee shall relate to verification of grievances in the letter  of the Association as well as the allegations made in the said  editorial  regarding  the  irregularities  in  relation  to  the  appointment  of  Members  of  the  Tribunal  and  regarding  the  decisions by some of the Bench of the Tribunal.”

By  letter  dated  24.7.2009,  the  President,  CESTAT  informed  Shri  B.V.  

Kumar,  President  of  the  petitioner-Association  about  appointment  of  the  

Inquiry Committee.   

6. Soon thereafter,  the Inquiry Committee  informed the parties  that  it  

would  meet  at  Bangalore  on  11.8.2009  but  President  of  the  petitioner-

Association  expressed  his  inability  to  attend  the  meeting  and  sought  

re-schedulment for 28/29.8.2009.  It appears that members of the petitioner-  

Association  were  apprehensive  that  an  inquiry  into  the  truthfulness  or  

otherwise of the contents of the editorial may cause embarrassment to some  

of them as also some members of CESTAT and, therefore, they decided to  

adopt a shortcut to silence him.  In furtherance of this object, the petitioner  

sent letters dated 8.8.2009 and 25.8.2009 to the Solicitor General of India  

and the  Attorney  General  of  India  respectively  seeking  their  consent  for  

filing contempt petition against the respondent.  In neither of those letters,  

the petitioner made a mention of the Inquiry Committee constituted by the  

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President, CESTAT to look into the complaint made by it.  The Attorney  

General gave his consent vide letter dated 9.9.2009.  Thereafter, this petition  

was filed.   

7. The petitioner has sought initiation of contempt proceedings against  

the  respondent  by  asserting  that  the  editorial  written  by  him is  in  clear  

violation  of  the  undertaking  given  to  this  Court  that  serious  complaint  

regarding the functioning of the Tribunal will be brought to the notice of the  

Chief  Justice  of  India,  and/or  the  Ministry  of  Finance  and  response  or  

corrective action will be awaited for a reasonable time before taking further  

action.  According to the petitioner, the editorial in question will not only  

create a sense of fear and inhibition in the minds of the members who are  

entrusted with the onerous task of dispensing justice, but also prevent the  

advocates and practitioners who appear before CESTAT from advancing the  

cause of their  clients  without  any apprehension of  bias/favouritism.  The  

petitioner also pleaded that by targeting the particular member of CESTAT,  

the respondent has scandalized the entire institution.

8. In the written statement filed by him, the respondent has taken stand  

that he cannot be accused of violating the undertaking filed in this Court on  

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25.8.1998 because before writing the editorial he had brought all the facts to  

the notice of the Finance Minister and the Revenue Secretary, Government  

of India as also the President, CESTAT and other functionaries, but no one  

had taken corrective measures.  The respondent has claimed that the sole  

object  of  writing the editorial  was to enable  the concerned authorities  to  

streamline the functioning of CESTAT on administrative and judicial side  

and take other  corrective  measures.   He has referred to  the  observations  

made by this Court in  R.K. Jain v. Union of India AIR (1993) SC 1769,  

162nd Report of the Law Commission on the Review of Functioning of CAT,  

CEGAT and ITAT and pleaded that he had written the editorial with a spirit  

of reform and not to scandalize the functioning of CESTAT.

9. Shri  P.S.  Narasimhan,  learned  senior  counsel  appearing  for  the  

petitioner emphasized that the editorial written by the respondent is clearly  

intended to scandalize the functioning of CESTAT and, therefore, this Court  

should take cognizance and initiate proceedings against him under Sections  

2(c), 12 and 15 of the Act read with Article 129 of the Constitution.  Learned  

senior counsel submitted that contents of the editorial amount to criminal  

contempt  because  adverse  and  uncharitable  comments  made  by  the  

respondent  qua  some  of  the  orders  passed  by  the  particular  Bench  of  

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CESTAT amounts to direct interference in the administration of justice and  

the same are bound to affect the credibility of the Tribunal in the eyes of the  

public in general and the litigants in particular who will have no confidence  

in  the  particular  member  of  CESTAT  and  those  appearing  before  the  

particular Bench will not be able to represent the cause of their clients with  

the freedom which is sine qua non for dispensation of justice.

10. Shri Prashant Bhushan, learned counsel for the respondent questioned  

the bona fides of the petitioner and argued that this petition is liable to be  

dismissed  because  the  same  has  been  filed  with  an  oblique  motive  of  

preventing  the  respondent  from  highlighting  the  irregularities  in  the  

functioning of CESTAT.  Learned counsel emphasized that the petitioner is  

guilty of misleading the Attorney General in granting consent for filing of  

the contempt petition because the factum of appointment of two-Member  

Committee  by the President,  CESTAT was deliberately  not mentioned in  

letter dated 25.8.2009.   Learned counsel then submitted that the sole object  

of writing the editorial  was to awaken the concerned functionaries of the  

Government  and  CESTAT  about  the  serious  irregularities  in  the  

appointment, posting and transfer of the Members of CESTAT and orders  

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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  

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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:

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“7. The allegations  made by Shri  R.K.  Jain in  regard  to  the  working of  the  CEGAT are  grave and the authorities  can ill  afford to turn a Nelson’s eye to those allegations made by a  person who is fairly well conversant with the internal working  of the Tribunal. Refusal to inquire into such grave allegations,  some  of  which  are  capable  of  verification,  can  only  betray  indifference  and  lack  of  a  sense  of  urgency  to  tone  up  the  working of  the  Tribunal.  Fresh articles  have appeared in the  Excise  Law  Times  which  point  to  the  sharp  decline  in  the  functioning of the CEGAT pointing to a serious management  crisis. It is high time that the administrative machinery which is  charged with the duty to supervise the working of the CEGAT  wakes  up  from  its  slumber  and  initiates  prompt  action  to  examine the allegations by appointing a high-level team which  would immediately inspect the CEGAT, identify the causes for  the  crisis  and suggest  remedial  measures.  This  cannot  brook  delay.”

13. The respondent was very much conscious of the undertaking filed in  

the earlier contempt proceedings and this is the reason why before writing  

the editorial, he sent several communications to the concerned functionaries  

to bring to their notice serious irregularities in the transfer and posting of  

members, appointment of members, changes made in the pronounced orders  

and many unusual orders passed by the particular Bench of CESTAT, which  

were  set  aside by the Karnataka and the Kerala  High Courts  after  being  

subjected to severe criticism.  The sole purpose of writing those letters was  

to enable the concerned authorities to take corrective measures but nothing  

appears to have been done by them to stem the rot.  It is neither the pleaded  

case of the petitioner nor any material has been placed before this Court to  

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show that the Finance Minister or the Revenue Secretary, Government of  

India had taken any remedial action in the context of the issues raised by the  

respondent.   Therefore, it  is not possible to hold the respondent guilty of  

violating the undertaking given to this Court.

14. Before adverting to the second and more important issue, we deem it  

necessary to remind ourselves that freedom of speech and expression has  

always been considered as the most cherished right of every human being.  

Justice Brennan of U.S. Supreme Court, while dealing with a case of libel –  

New York Times Company v. L.B. Sullivan observed that “it is a prized  

privilege to speak one’s mind, although not always with perfect good taste,  

on  all  public  institutions  and  this  opportunity  should  be  afforded  for  

vigorous  advocacy  no  less  than  abstract  discussion.”  In  all  civilized  

societies, the Courts have exhibited high degree of tolerance and accepted  

adverse comments and criticism of their orders/judgments even though, at  

times,  such  criticism  is  totally  off  the  mark  and  the  language  used  is  

inappropriate.  The  right  of  a  member  of  the  public  to  criticize  the  

functioning of a judicial  institution has been beautifully  described by the  

Privy Council  in  Andre Paul Terence Ambard v. Attorney General of  

Trinidad and Tobago AIR 1936 PC 141 in the following words:

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“No wrong is  committed  by  any member  of  the  public  who  exercises  the  ordinary  right  of  criticizing  in  good  faith  in  private or public the public act done in the seat of justice. The  path  of  criticism  is  a  public  way:  the  wrongheaded  are  permitted to err therein: provided that members of the public  abstain from imputing improper motives to those taking part in  the  administration  of  justice,  and  are  genuinely  exercising  a  right  of  criticism  and  not  acting  in  malice  or  attempting  to  impair the administration of justice, they are immune. Justice is  not  a  cloistered  virtue:  she  must  be  allowed  to  suffer  the  scrutiny  and  respectful  even  though  outspoken  comments  of  ordinary men.”

In  Debi Prasad Sharma v. The King Emperor AIR 1943 PC 202, Lord  

Atkin speaking on behalf of the Judicial Committee observed:

“In 1899 this Board pronounced proceedings for this species of  contempt (scandalization) to be obsolete in this country, though  surviving in other parts of the Empire, but they added that it is a  weapon to be used sparingly and always with reference to the  administration  of  Justice:  McLeod v.  St.  Auhyn.  In  In  re  a  Special Reference from the Bahama Islands the test applied by  the very strong Board which heard the reference was whether  the words complained of were in the circumstances calculated  to obstruct or interfere with the course of justice and the due  administration of the law. In Queen v.  Gray it was shown that  the offence of scandalizing the court itself was not obsolete in  this  country.  A very  scandalous  attack  had  been made  on  a  Judge for his judicial utterances while sitting in a criminal case  on circuit, and it was with the foregoing opinions on record that  Lord  Russell  of  Killowen,  C.J.,  adopting  the  expression  of  Wilmot, C.J., in his opinion in Rex v. Almon which is the source  of much of the present law on the subject, spoke of the article  complained  of  as  calculated  to  lower  the  authority  of  the  Judge.”

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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  

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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  

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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  

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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  

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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-

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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  

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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,  

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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:  

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“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  

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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

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(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  

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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.”  

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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  

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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:-

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“… 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]

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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  

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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.  

36

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  

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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”:

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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  

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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 –  

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“We do not know on what basis the Tribunal has held  that prospectively has no relevance in this case…the  Tribunal or even the High Courts have no power to  grant  retrospectively  for  a  notification  in  the  interpretation process.”

21. Although, the petitioner has tried to project the editorial as a piece of  

writing intended to demean CESTAT as an institution  and scandalize its  

functioning but we do not find anything in it which can be described as an  

attempt to lower the authority of CESTAT or ridicule it in the eyes of the  

public.  Rather the object of the editorial was to highlight the irregularities in  

the  appointment,  posting  and  transfer  of  the  members  of  CESTAT  and  

instances of the abuse of the quasi judicial powers.  What was incorporated  

in the editorial was nothing except the facts relating to manipulative transfer  

and  posting  of  some members  of  CESTAT and  substance  of  the  orders  

passed by the particular Bench of CESTAT, which were set aside by the  

High Courts of Karnataka and Kerala.  Even, this Court was constrained to  

take cognizance of the unusual order passed by CESTAT of which Shri T.K.  

Jayaraman was a member whereby the appeal of the assessee was decided  

on merits even though the Tribunal was required to examine the question of  

limitation  only.   By  writing  the  editorial  which  must  have  caused  

embarrassment  to  functionaries  of  the  Central  Government and CESTAT  

and even some members of the petitioner-Association  but  that  cannot be  

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dubbed as an attempt to scandalize CESTAT as a body or interfere with the  

administration of justice.  What the respondent projected was nothing but  

true state of the functioning of CESTAT on administrative side and to some  

extent  on  judicial  side.   By  doing  so,  he  had  merely  discharged  the  

constitutional duty of a citizen enshrined in Article 51A(h).  It is not the  

petitioner’s case that the facts narrated in the editorial regarding transfer and  

posting of the members of CESTAT are incorrect or that the respondent had  

highlighted the same with an oblique motive or that the orders passed by  

Karnataka and Kerala High Courts to which reference has been made in the  

editorial were reversed by this Court.  Therefore, it is not possible to record  

a finding that by writing the editorial in question, the respondent has tried to  

scandalize the functioning of CESTAT or made an attempt to interfere with  

the administration of justice.

22. The  matter  deserves  to  be  examined  from  another  angle.  The  

substituted Section 13 represents an important legislative recognition of one  

of the fundamentals of our value system i.e. truth.  The amended section  

enables the Court to permit justification by truth as a valid defence in any  

contempt proceeding if it is satisfied that such defence is in public interest  

and the  request  for  invoking the  defence  is  bonafide.   In  our  view,  if  a  

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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  

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make their  allegations internally (for example, to other people within the  

accused organization) or externally (to regulators, law enforcement agencies,  

to the media or to groups concerned with the issues).  Most whistleblowers  

are internal whistleblowers, who report misconduct on a fellow employee or  

superior within their company. One of the most interesting questions with  

respect  to  internal  whistleblowers  is  why  and  under  what  circumstances  

people will either act on the spot to stop illegal and otherwise unacceptable  

behavior or report it. There is some reason to believe that people are more  

likely  to  take  action  with  respect  to  unacceptable  behavior,  within  an  

organization,  if  there  are  complaint  systems  that  offer  not  just  options  

dictated by the planning and controlling organization, but a choice of options  

for individuals, including an option that offers near absolute confidentiality.  

However,  external whistleblowers report misconduct on outside persons or  

entities. In these cases, depending on the information's severity and nature,  

whistleblowers  may  report  the  misconduct  to  lawyers,  the  media,  law  

enforcement or watchdog agencies, or other local, state, or federal agencies.  

In our view, a person like the respondent can appropriately be described as a  

whistleblower for the system who has tried to highlight the malfunctioning  

of  an  important  institution  established  for  dealing  with  cases  involving  

revenue  of  the  State  and  there  is  no  reason  to  silence  such  person  by  

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invoking Articles 129 or 215 of the Constitution or the provisions of the Act.

24. We agree with the learned counsel for the respondent that this petition  

lacks bonafide and is an abuse of the process of the Court.  The petitioner is  

a  body  of  professionals  who  represent  the  cause  of  their  clients  before  

CESTAT and may be other Tribunals and authorities.  They are expected to  

be vigilant and interested in transparent functioning of CESTAT. However,  

instead of doing that, they have come forward to denounce the editorial and  

in the process  misled the Attorney General of India in giving consent by  

suppressing  the  factum  of  appointment  of  Inquiry  Committee  by  the  

President, CESTAT.  We are sorry to observe that a professional body like  

the petitioner has chosen wrong side of the law.

25.      In the result,  the petition is  dismissed.   For filing a frivolous  

petition,  the  petitioner  is  saddled  with  cost  of  Rs.2,00,000/-,  of  which  

Rs.1,00,000/-  shall  be  deposited  with  the  Supreme Court  Legal  Services  

Committee and Rs.1,00,000/- shall be paid to the respondent.

….………………….…J. [G.S. Singhvi]

…..…..………………..J.

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[Asok Kumar Ganguly] New Delhi August 13, 2010

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