Case: Indirect Tax Practitioners Association Vs. R.K. Jain

1. Whether by writing editorial, which was published in Excise Law Times dated 1.6.2009 with the title CESTAT PRESIDENT SETS HOUSE IN ORDERANNUAL TRANSFERS FOR MEMBERS INTRODUCEDREGISTRY 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 India2. 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 impressionThat I have been advised by my senior counselMr. 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 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 futureAfter 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 costsWe express our gratitude to Mr. T.R. Andhyarujina who as assisted the Court at our request3. 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 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 MINISTERCarrying of gold in soles of the shoes is a trade practice as per CESTAT orderCarrying of gold in soles of the shoes is a trade practice as per CESTAT orderChange of Pronounced Orders by CESTAT MembersOpen Court handwritten order directing deposit of Rs.15 lakhs changed to Rs.5 lakhsCESTAT : Changing of ordersDirection for deposit of Rs.50 lakhs changed to Rs.50,000 in a Customs case booked by DRI forn of imports from China involving Rs.2.07 croresCESTAT, Settlement Commission, Revisionary Authority and Govt. Litigation in revenue evasion cases involving high revenueAppointment of Judicial Members to CESTATSerious irregularities and tampering with the recordsCESTAT : Changing of ordersDirection for deposit of Rs.50 lakhs changed to Rs.50,000 in a Customs case booked by DRI involving Rs.2.07 croresFurther revelations and EvidencesNeed for CBI Enquiry strengthensLETTERS TO THE REVENUE SECRETARYCESTAT : 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 themAppointment of Judicial Members to CESTATSerious irregularities and tampering with the recordsUnauthorised and manipulated Tour Notes/Tours by Ms. Jyoti Balasundaram, Vice PresidentAppeal by Revenue Department in S.C.95% of appeal lostDepartments representation at High Court still worseNeed for remedial measuresCESTAT : Changing of ordersDirection for deposit of Rs.50 lakhs changed to Rs. 50,000 in a Customs case booked by DRI involving Rs. 2.07 croresFurther revelations and EvidencesNeed for CBI Enquiry strengthensLETTERS TO THE HONBLE PRESIDENT, CESTATChange of Pronounced Orders by CESTAT MembersOpen Court handwritten order directing deposit of Rs.15 lakhs changed to Rs.5 lakhsDepartments ROM Application pointing out this discrepancy, repeatedly dismissed by CESTATDirection for deposit of Rs.50 lakh changed to Rs.50,000 in a Customs case booked by DRI forn of imports from China involving Rs.2.07 croresNeed for CBI EnquiryManner of listing of matters in the Cause ListNeed for uniform practice for dealing with Mention matters by different Zonal Benches of the CESTATAnnual Physical Checking of pending Appeals and ApplicationsMisplacement of Appeal files after grant of Stay in heavy mattersPronouncement of reverse orders within reasonable periodg when order not pronounced within 4 monthsBombay High Court decisionPronouncement of Reserved OrderListing in cause listComplaint against Shri S. Chandran, Registrar, CESTAT fore of Miscellaneous Order No.412/20077 passed by Justice R.K. Abhichandani, and misusing of authority as First Appellate Authority under RTI Act, by suppressing/fabricating informationDisciplinary action against Shri S.K. Verma, Assistant Registrar, CESTAT as per the directions of the Presiding Officer of Debt Recovery, Delhi and for other complaint and lapsese of records for Supplementary Cause Lists issued by Chennai Bench of the9 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, 1982Need for Inquiry by an Independent AgencyService Tax appeals relating to valuation and rate of tax by Single Member Bench in violation of Section 86(7) of Finance Act, 1994Need for incorporating the amount of duty, penalty and fine in the orders passed by the CESTATAct of insubordination by Asst. Registrar by commenting on exercise of power by President as violating rules and exceeding powersNeed for disciplinary actionInformation about antedating of orders and delayed release of orders, particularly of CESTAT Bangalore and of Single Member Bench of the CESTAT, New DelhiReport of despatch of CESTAT OrdersInformation about antedating of orders and delayed release of orders, particularly by Bangalore Bench of CESTATLodging of Police Complaint for missing records from CESTAT, New DelhiDelay in dispatch of the ordersNon submission of weekly report for dispatch of orders by the Regional BenchesInaction by the Registrar and Deputy Registrar at CESTAT Headquarters, New DelhiComplaint against Shri P.K. Das, Honble Member (Judicial), CESTAT, New DelhiStrengthening the CESTAT by providing facilities to the Members in the TribunalListing of matter in two different courtsFiles for Tour orders and Roaster orders for 2001 – missingIssuing of letters without File Number or letter number or the dispatch diary numberWithholding of Supreme Court remand orders by the CESTAT Registry, MumbaiRequest for disciplinary actionFault of CESTAT Registry, Mumbai in not placing before the Bench the proof of deposit ofTracing out of case records of Kozy Silks (P) LtdLETTER TO THE CDR, CESTAT, NEW DELHIs to be heard togetherDiscrepancies between pronounced orders and issued ordersLETTERS TO CENTRAL BOARD OF EXCISE & CUSTOMSCESTAT : Changing of ordersDirection for deposit of Rs.50 lakhs changed to Rs.50,000 in a Customs case booked by DRI involving Rs. 2.07 croresFurther revelations and EvidencesChange in Pronounced Orders9 Appeals under Section 35G of the Central Excise Act to be filed within 180 daysHigh Courts have no power to condone the delayLatest Supreme Court decision in the case of Chaudharana Steels (P) Ltd. v. Commissioner of Central Excise, AllahabadNeed for suitably modifying the CBE & C CircularChange of pronounced orders by CESTAT MembersWhereabouts of complaint dated8 made to the Finance Minister4. Since no one seems to have taken cognizance of the letters written by the respondent, he wrote the editorial in which he commended the 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

Reasoning: 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 contempt12. 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 ArticlesR.K. Jain v. Union of India (1993) 4 SCC 119 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 ofA reading of the editorial in its entirety unmistakably shows that while expressing his appreciation for the steps taken by the new President of CESTAT to cleanse the administration, the respondent had highlighted what he perceived as irregularities in the transfer and postings of some members and appointment of one member. He pointed out that Shri T.K. Jayaraman was accommodated at Bangalore by transferring Shri K.C. Mamgain from Bangalore to Delhi in less than one year of his posting and further that the posting of Shri T.K. Jayaraman for a period of 7 years was against all the norms, 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 criticism21. 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 then but that cannot be 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 petitioners 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 justice22. 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 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 respondents 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 measures23. 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 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 informations 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 invoking Articles 129 or 215 of the Constitution or the provisions of the Act24. 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.