M J Antony: Appeals without end
M J Antony/ - Sep 12,2012 00:54 AM

Banks and lending institutions often tend to behave like Shylock, rigorously invoking debt recovery laws that are all in their favour. Big corporations can defend themselves by engaging canny lawyers. But it is rural borrowers, small and medium enterprises and even housewives who have taken a Rs 1-lakh loan who are driven to financial ruin and suicides. They are dragged up to the Supreme Court. Two judgments pronounced by the Supreme Court in recent weeks say as much. In the case, Gurgaon Gramin Bank vs Smt Khazani, the court began with the remark that the number of cases involving small and trivial matters is on the rise. "The central and state governments and their instrumentalities, banks, nationalized or private, come to courts may be due to ego clash or to save the officers' skin. Judicial system is over-burdened; naturally it causes delay in adjudication of disputes,&" the judgment said. "On more than one occasion, this court has reminded the governments as well as various banking institutions to take earnest efforts to resolve the disputes at their end. At times, some give and take attitude should be adopted or both will sink. Unless, serious questions of law of general importance arise for consideration or a question which affects large number of persons or the stakes are very high, the courts' jurisdiction cannot be invoked for resolution of small and trivial matters. We are really disturbed by the manner in which those types of matters are being brought to courts even at the level of the Supreme Court.&" In this case, a village woman took a loan of Rs 15,000 from the bank to buy a buffalo and insured it with New India Assurance Co. When the animal died, she sought compensation and it was denied. She moved the district consumer forum against both the bank and the insurance company and won the case. Her rivals carried the fight for over a decade to the state consumer commission and the national commission, and now the Supreme Court. They lost all the way, spending more than Rs 30,000 to resist the claim of Rs 15,000. The judgment ended with the prayer: "Let God save the gramins!&" The Madras High Court called the case, Palap Software vs Indian Bank, as a "classic example&" of the misuse of the Securitisation Act and described how the lenders demanded their pound of flesh to cut non-performing assets. Corporate goliaths can carry oppressive suits up to the Supreme Court. Last week, the court noted that though ITC Ltd lost its case in three courts below, it had stretched its neck again for the fourth defeat in the Supreme Court. The judgment in ITC vs Adarsh Society stated in its prelude: A simple issue with regard to possession of land took over two decades to reach the court at the instance of the company. "It is indeed sad, if not unfortunate,&" the judgment stated while narrating the meandering course of the case, "that what was intended by the legislature to be a summary proceeding has erupted into an over two decades old litigation. The sheer number of pending cases permitted the trial court to return its findings, after almost a decade.&" In both the Supreme Court cases, companies that suffered serial defeats in courts below entered the apex court through the "Special Leave Petition&" (SLP) route. Article 136 of the Constitution was meant to be used rarely, and it vests discretionary power on the Supreme Court to admit appeals even if the high courts did not grant "leave to appeal&". But the Supreme Court has been using this discretion indiscriminately for decades, allowing the dockets to bulge. More than 40,000 cases used this gateway in the past year alone. In the Gramin Bank judgment discussed above, the judges remarked that the bank's SLP was admitted "luckily&". Though it is a sarcastic observation, it is an indirect admission by judges themselves that more than substantial questions of law, what matter are the composition of Benches, gift of the garbed, or even the Delhi ambience. The final decision is little better, as the judges add that "may be due to the ill-luck of the bank, the matter is before us&". These are a few instances in which the legal profession itself has to take the blame for mounting arrears. Two chances to appeal should normally be enough to decide a case. The third or fourth appeals to the high courts or the Supreme Court by a person who has not even won once before should be rejected at the threshold. The present disarray in the judicial system simply does not justify another gamble by the rich, however eminent the counsel may be, and however incompetent the judge below is perceived to be. Lawyers should also not prod clients to file appeals in hopeless cases. As it is, even in the Supreme Court, dozens of review petitions are summarily dismissed in chambers every day during lunch time. Some of them return wearing another hat called "curative petition&" and suffer the same fate.

Cyber crime hits 80 Indians a minute: Norton report

High cost brought on by alarming ignorance of basic precautions for prevention

BS Reporter / Mumbai Sep 12, 2012, 00:37 IST

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Close to 42 million people in India were hit by cyber crime attacks in the past 12 months, causing an approximate loss of $8 billion (Rs 44,500 crore). The annual findings of the Norton Cybercrime report suggest a global financial loss of up to $110 billion.

According to the 2012 report, 66 per cent of Indian online adults have been victims of cyber crime in their lifetime. In the past 12 months, 56 per cent of online adults in India have experienced it (a little over 115,000 daily victims or 80 per minute). The average direct financial cost per victim is $192, up 18 per cent over 2011 ($163).

SC delivers judgment in Media Coverage Guidelines: Finding an acceptable constitutional balance between free press and administration of justice

Posted on 11 September 2012 by Praveen Sharma

Court

Supreme Court

Brief

In the words of C.Justice Kapadia: Finding an acceptable constitutional balance between free press and administration of justice is a difficult task in every legal system. Civil Appeal of 2011 were filed challenging the order of the Securities Appellate Tribunal whereby the appellants (hereinafter for short "Sahara") were directed to refund amounts invested with the appellants in certain Optionally Fully Convertible Bonds (OFCD) with interest. With the same regard there was an official communication enclosing the one proposal by the Advocate-on-Record for Sahara to the the Advocate-on-Record for SEBI. A day prior to the hearing of IA No. 3 on 10.02.2012, one of the news channels flashed on TV the details of the said proposal which had been communicated only inter parties and which was obviously not meant for public circulation. The concerned television channel also named the valuer who had done the valuation of the assets proposed to be offered as security. - On 10.02.2012, there was no information forthcoming from SEBI of either acceptance or rejection of the proposal. - The above facts were inter alia brought to the notice of this Court at the hearing of IA No. 3 on 10.02.2012 when Shri F.S. Nariman, learned senior counsel for Sahara orally submitted that disclosure to the Media was by SEBI in breach of confidentiality which was denied by the learned counsel for SEBI. After hearing the learned counsel for the parties, this Court passed the following order: "We are distressed to note that even "without prejudice" proposals sent by learned counsel for the appellants to the learned counsel for SEBI has come on one of the TV channels. Such incidents are increasing by the day. Such reporting not only affects the business sentiments but also interferes in the administration of justice. In the above circumstances, we have requested learned counsel on both sides to make written application to this Court in the form of an I.A. so that appropriate orders could be passed by this Court with regard to reporting of matters, which are sub-judice." Thus, SC decision herein is confined to IA Nos. 4, 5 please find the whole judgement below :

Citation

I.A. Nos. 4-5, 10, 11, 12-13, 16-17, 18, 19, 20-21, 22-23, 24- 25, 26-27, 30-31, 32-33, 34, 35-36, 37-38, 39-40, 41-42, 43- 44, 45-46, 47-48, 49-50, 55-56, 57, 58, 59, 61 and 62 In C.A. No. 9813 of 2011 and C.A. No. 9833 of 2011 Sahara India Real Estate Corp. Ltd. & Ors. …Appellants Vs. Securities & Exchange Board of India & anr. …Respondents with I.A. Nos. 14 and 17 in C.A. No. 733 of 2012

Judgement

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

I.A. Nos. 4-5, 10, 11, 12-13, 16-17, 18, 19, 20-21, 22-23, 24-

25, 26-27, 30-31, 32-33, 34, 35-36, 37-38, 39-40, 41-42, 43-

44, 45-46, 47-48, 49-50, 55-56, 57, 58, 59, 61 and 62

C.A. No. 9813 of 2011 and C.A. No. 9833 of 2011

Sahara India Real Estate Corp. Ltd. & Ors. …Appellants

Vs.

Securities & Exchange Board of India & anr. …Respondents

with

I.A. Nos. 14 and 17 in C.A. No. 733 of 2012

J U D G M E N T

S. H. KAPADIA, CJI

Introduction

1. Finding an acceptable constitutional balance between free press and administration of justice is a difficult task in every legal system.

Factual background

2. Civil Appeal Nos. 9813 and 9833 of 2011 were filed challenging the order dated 18.10.2011 of the Securities Appellate Tribunal whereby the appellants (hereinafter for short "Sahara") were directed to refund amounts invested with the appellants in certain Optionally Fully Convertible Bonds (OFCD) with interest by a stated date.

3. By order dated 28.11.2011, this Court issued show cause notice to the Securities and Exchange Board of India (SEBI), respondent No. 1 herein, directing Sahara to put on affidavit as

to how they intend to secure the liabilities incurred by them to the OFCD holders during the pendency of the Civil Appeals.

4. Pursuant to the aforesaid order dated 28.11.2011, on 4.01.2012, an affidavit was filed by Sahara explaining the manner in which it proposed to secure its liability to OFCD holders during the pendency of the Civil Appeals.

5. On 9.01.2012, both the appeals were admitted for hearing. However, IA No. 3 for interim relief filed by Sahara was kept for hearing on 20.01.2012.

6. On 20.01.2012, it was submitted by the learned counsel for SEBI that what was stated in the affidavit of 4.01.2012 filed by Sahara inter alia setting out as to how the liabilities of Sahara India Real Estate Corporation Ltd. (SIRECL) and Sahara Housing and Investment Corporation (SHICL) were to be secured was insufficient to protect the OFCD holders.

7. This Court then indicated to the learned counsel for Sahara and SEBI that they should attempt, if possible, to reach a consensus with respect to an acceptable security in the form of an unencumbered asset. Accordingly, IA No. 3 got stood over for three weeks for that purpose.

8. On 7.02.2012, the learned counsel for Sahara addressed a personal letter to the learned counsel for SEBI at Chennai enclosing the proposal with details of security to secure repayment of OFCD to investors as pre-condition for stay of the impugned orders dated 23.06.2011 and 18.10.2011 pending hearing of the Civil Appeals together with the Valuation Certificate indicating fair market value of the assets proposed to be offered as security. This was communicated by e-mail from Delhi to Chennai. Later, on the same day, there was also an official communication enclosing the said proposal by the Advocate-on-Record for Sahara to the Advocate-on-Record for SEBI.

9. A day prior to the hearing of IA No. 3 on 10.02.2012, one of the news channels flashed on TV the details of the said proposal which had been communicated only inter parties and which was obviously not meant for public circulation. The concerned television channel also named the valuer who had done the valuation of the assets proposed to be offered as security.

10. On 10.02.2012, there was no information forthcoming from SEBI of either acceptance or rejection of the proposal.

11. The above facts were inter alia brought to the notice of this Court at the hearing of IA No. 3 on 10.02.2012 when Shri F.S. Nariman, learned senior counsel for Sahara orally submitted that disclosure to the Media was by SEBI in breach of confidentiality which was denied by the learned counsel for SEBI. After hearing the learned counsel for the parties, this Court passed the following order:

"We are distressed to note that even "without prejudice" proposals sent by learned counsel for the appellants to the learned counsel for SEBI has come on one of the TV channels. Such incidents are increasing by the day. Such reporting not only affects the business sentiments but also interferes in the administration of justice. In the above circumstances, we have requested learned counsel on both sides to make written application to this Court in the form of an I.A. so that appropriate orders could be passed by this Court with regard to reporting of matters, which are sub-judice."

12. Pursuant to the aforesaid order, IA Nos. 4 and 5 came to be filed by Sahara. According to Sahara, IA Nos. 4 and 5 raise a question of general public importance. In the said IA Nos. 4 and 5, Sahara stated that the time has come that this Court should give appropriate directions with regard to reporting of matters (in electronic and print media) which are sub judice. In this connection, it has been further stated: "it is well settled that it is inappropriate for comments to be made publicly (in the Media or otherwise) on cases (civil and criminal) which are sub judice; this principle has been stated in Section 3 of the Contempt of Courts Act, which defines criminal contempt of court as the doing of an act whatsoever which prejudices or interferes or tends to interfere with the due course of any judicial proceeding or tends to interfere or interfere with or obstruct or tends to interfere or obstruct the administration of justice". In the IAs, it has been further stated that whilst there is no fetter on the fair reporting of any matter in court, matters relating to proposal made inter-parties are privileged from public disclosure. That, disclosure and publication of pleadings and other documents on the record of the case by third parties (who are not parties to the proceedings in this court) can (under the rules of this Court) only take place on an application to the court and pursuant to the directions given by the court (see Order XII, Rules 1, 2 and 3 of Supreme Court Rules, 1966). It was further stated that in cases like the present one a thin line has to be drawn between two types of matters; firstly, matters between company, on the one hand, and an authority, on the other hand, and, secondly, matters of public importance and concern. According to Sahara, in the present case, no question\ of public concern was involved in the telecast of news regarding the proposal made by Sahara on 7.02.2012 by one side to the other in the matter of providing security in an ongoing matter. In the IAs, it has been further stated that this Court has observed in the case of State of Maharashtra v. Rajendra J. Gandhi [(1997) 8 SCC 386] that: "A trial by press, electronic media or public agitation is the very antithesis of rule of law". Consequently, it has been stated in the IAs by Sahara that this Court should consider giving guidelines as to the manner and extent of publicity which can be given to pleadings/ documents filed in court by one or the other party in a pending proceedings which have not yet been adjudicated upon.

13. Accordingly, vide IA Nos. 4 and 5, Sahara made the following prayers:

"(b) appropriate guidelines be framed with regard to reporting (in the electronic and print media) of matters which are subjudice in a court including public disclosure of documents forming part of court proceedings.

(c) appropriate directions be issued as to the manner and extent of publicity to be given by the print/ electronic media of pleadings/ documents filed in a proceeding in court which is pending and not yet adjudicated upon;"

14. Vide IA No. 10, SEBI, at the very outset, denied that the alleged disclosure was at its instance or at the instance of its counsel. It further denied that papers furnished by Sahara were passed on by SEBI to the TV Channel. In its IA, SEBI stated that it is a statutory regulatory body and that as a matter of policy SEBI never gives its comments to the media on matters which are under investigation or sub judice. Further, SEBI had no business stakes involved to make such disclosures to the media. However, even according to SEBI, in view of the incident having happened in court, this Court should give appropriate directions or frame such guidelines as may be deemed appropriate.

15. At the very outset, we need to state that since an important question of public importance arose for decision under the above circumstances dealing with the rights of the citizens and the media, we gave notice and hearing to those who had filed the IAs; the question of law being that every citizen has a right to negotiate in confidence inasmuch as he/ she has a right to defend himself or herself. The source of these two rights comes from the common law. They are based on presumptions of confidentiality and innocence. Both, the said presumptions are of equal importance. At one stage, it was submitted before us that this Court has been acting suo motu. We made it clear that Sahara was at liberty to withdraw the IAs at which stage Shri Sidharth Luthra, learned senior counsel stated that Sahara would not like to withdraw its IAs. Even SEBI stated that if Sahara withdraws its IAs, SEBI would insist on its IA being decided. In short, both Sahara and SEBI sought adjudication. Further, on 28.03.2012, learned counsel for Sahara filed a note in the Court citing instances (mostly criminal cases) in which according to him certain aberration qua presumption of innocence has taken place. This Court made it clear that this Court is concerned with the question as to whether guidelines for the media be laid down? If so, whether they should be self-regulatory? Or whether this Court should restate the law or declare the law under Article 141 on balancing of Article 19(1)(a) rights vis-à-vis Article 21, the scope of Article 19(2) in the context of the law regulating contempt of court and the scope of Article 129/ Article 215.

16. Thus, our decision herein is confined to IA Nos. 4, 5 and

10. This clarification is important for the reason that some accused have filed IAs in which they have sought relief on the ground that their trial has been prejudiced on account of excessive media publicity. We express no opinion on the merits of those IAs.

Constitutionalization of free speech Comparative law: differences between the US and other common-law experiences

17. Protecting speech is the US approach. The First Amendment does not tolerate any form of restraint. In US, unlike India and Canada which also have written Constitutions, freedom of the press is expressly protected as an absolute right. The US Constitution does not have provisions similar to Section 1 of the Charter Rights under the Canadian Constitution nor is such freedom subject to reasonable restrictions as we have under Article 19(2) of the Indian Constitution. Therefore, in US, any interference with the media freedom to access, report and comment upon ongoing trials is prima facie unlawful. Prior restraints are completely banned. If an irresponsible piece of journalism results in prejudice to the proceedings, the legal system does not provide for sanctions against the parties responsible for the wrongdoings. Thus, restrictive contempt of court laws are generally considered incompatible with the constitutional guarantee of free speech. However, in view of cases, like O.J. Simpson, Courts have evolved procedural devices aimed at neutralizing the effect of prejudicial publicity like change of venue, ordering re-trial, reversal of conviction on appeal (which, for the sake of brevity, is hereinafter referred to as "neutralizing devices"). It may be stated that even in US as of date, there is no absolute rule against "prior restraint" and its necessity has been recognized, albeit in exceptional cases [see Near v. Minnesota, 283 US 697] by the courts evolving neutralizing techniques.

18. In 1993, Chief Justice William Rehnquist observed: "constitutional law is now so firmly grounded in so many countries, it is time that the US Courts begin looking at decisions of other constitutional courts to aid in their own deliberative process".

19. Protecting Justice is the English approach. Fair trials and public confidence in the courts as the proper forum for settlement of disputes as part of the administration of justice, under the common law, were given greater weight than the goals served by unrestrained freedom of the press. As a consequence, the exercise of free speech respecting ongoing court proceedings stood limited. England does not have a written constitution. Freedoms in English law have been largely determined by Parliament and Courts. However, after the judgment of ECHR in the case of Sunday Times v. United Kingdom [(1979) 2 EHRR 245], in the light of which the English Contempt of Courts Act, 1981 (for short "the 1981 Act") stood enacted, a balance is sought to be achieved between fair trial rights and free media rights vide Section 4(2). Freedom of speech (including free press) in US is not restricted as under Article 19(2) of our Constitution or under Section 1 of the Canadian Charter. In England, Parliament is supreme. Absent written constitution, Parliament can by law limit the freedom of speech. The view in England, on interpretation, has been and is even today, even after the Human Rights Act, 1998 that the right of free speech or right to access the courts for the determination of legal rights cannot be excluded, except by clear words of the statute. An important aspect needs to be highlighted. Under Section 4(2) of the 1981 Act, courts are expressly empowered to postpone publication of any report of the proceedings or any part of the proceedings for such period as the court thinks fit for avoiding a substantial risk of prejudice to the administration of justice in those proceedings.

Why is such a provision made in the Act of 1981? One of the reasons is that in Section 2 of the 1981 Act, strict liability has been incorporated (except in Section 6 whose scope has led to conflicting decisions on the question of intention). The basis of the strict liability contempt under the 1981 Act is the publication of "prejudicial" material. The definition of publication is also very wide. It is true that the 1981 Act has restricted the strict liability contempt to a fewer circumstances as compared to cases falling under common law. However, contempt is an offence sui generis. At this stage, it is important to note that the strict liability rule is the rule of law whereby a conduct or an act may be treated as contempt of court if it tends to interfere with the course of justice in particular legal proceedings, regardless of intent to do so. Sometimes, fair and accurate reporting of the trial (say a murder trial) would nonetheless give rise to substantial risk of prejudice not in the pending trial but in the later or connected trials. In such cases, there is no other practical means short of postponement orders that is capable of avoiding such risk of prejudice to the later or connected trials. Thus, postponement order not only safeguards fairness of the later or connected trials, it prevents possible contempt. That seems to be the underlying reason behind enactment of Section 4(2) of the 1981 Act. According to Borrie & Lowe on the "Law of Contempt", the extent to which prejudgment by publication of the outcome of a proceedings (referred to by the House of Lords in Sunday Times's case) may still apply in certain cases. In the circumstances to balance the two rights of equal importance, viz., right to freedom of expression and right to a fair trial, that Section 4(2) is put in the 1981 Act. Apart from balancing it makes the media know where they stand in the matters of reporting of court cases. To this extent, the discretion of courts under common law contempt has been reduced to protect the media from getting punished for contempt under strict liability contempt. Of course, if the court's order is violated, contempt action would follow.

20. In the case of Home Office v. Harman [(1983) 1 A.C. 280] the House of Lords found that the counsel for a party was furnished documents by the opposition party during inspection on the specific undertaking that the contents will not be disclosed to the public. However, in violation of the said undertaking, the counsel gave the papers to a third party, who published them. The counsel was held to be in contempt on the principle of equalization of the right of the accused to defend himself/herself in a criminal trial with right to negotiate settlement in confidence. [See also Globe and Mail v. Canada (Procureur général), 2008 QCCA 2516]

21. The Continental Approach seeks to protect personality. This model is less concerned with the issue of fair trial than with the need for safeguarding privacy, personal dignity and presumption of innocence of trial participants. The underlying assumption of this model is that the media coverage of pending trials might be at odds not only with fairness and impartiality of the proceedings but also with other individual and societal interests. Thus, narrowly focussed prior restraints are provided for, on either a statutory or judicial basis. It is important to note that in the common-law approach the protection of sanctity of legal proceedings as a part of administration of justice is guaranteed by institution of contempt proceedings. According to Article 6(2) of the European Convention of Human Rights, presumption of innocence needs to be protected. The European Courts of Human Rights has ruled on several occasions that the presumption of innocence should be employed as a normative parameter in the matter of balancing the right to a fair trial as against freedom of speech. The German Courts have accordingly underlined the need to balance the presumption of innocence with freedom of expression based on employment of the above normative parameter of presumption of innocence. France and Australia have taken a similar stance. Article 6(2) of the European Convention of Human Rights imposes a positive obligation on the State to take action to protect the presumption of innocence from interference by non-State actors. However, in a catena of decisions, the ECHR has applied the principle of proportionality to prevent imposition of overreaching restrictions on the media. At this stage, we may state, that the said principle of proportionality has been enunciated by this Court in Chintaman Rao v. The State of Madhya Pradesh [ (1950) SCR 759].

22. The Canadian Approach: Before Section 1 of Canadian Charter of Rights, the balance between fair trial and administration of justice concerns, on the one hand, and freedom of press, on the other hand, showed a clear preference accorded to the former. Since the Charter introduced an express guarantee of "freedom of the press and other media of communication", the Canadian Courts reformulated the traditional sub judice rule, showing a more tolerant attitude towards trial-related reporting [see judgment of the Supreme Court of Canada in Dagenais v. Canadian Broadcasting Corp., [1994] 3 SCR 835 which held that a publication ban should be ordered when such an order is necessary to prevent a serious risk to the proper administration of justice when reasonably alternative measures like postponement of trial or change of venue will not prevent the risk (necessity test); and that salutary effects of the publication bans outweigh the deleterious effects on the rights and interests of the parties and the public, including the effect on the right to free expression and the right of the accused to open trial (i.e. proportionality test)]. The traditional common law rule governing publication bans – that there be real and substantial risk of interference with the right to a fair trial – emphasized the right to a fair trial over the free expressions interests of those affected by the ban. However, in the context of post-Charter situation, the Canadian Supreme Court has held that when two protected rights come in conflict, Charter principles require a balance to be achieved that fully respects both the rights. The Canadian Courts have, thus, shortened the distance between the US legal experience and the common-law experiences in other countries. It is important to highlight that in Dagenais, the publication ban was sought under common law jurisdiction of the Superior Court and the matter was decided under the common law rule that the Courts of Record have inherent power to defer the publication. In R. v. Mentuck [2001] 3 SCR 442 that Dagenais principle was extended to the presumption of openness and to duty of court to balance the two rights. In both the above cases, Section 2(b) of the Charter which deals with freedom of the press was balanced with Section 1 of the Charter. Under the Canadian Constitution, the Courts of Record (superior courts) have retained the common law discretion to impose such bans provided that the discretion is exercised in accordance with the Charter demands in each individual case.

23. The Australian Approach: The Australian Courts impose publication bans through the exercise of their inherent jurisdiction to regulate their own proceedings. In Australia, contempt laws deal with reporting of court proceedings which interfere with due administration of justice. Contempt laws in Australia embody the concept of "sub judice contempt" which relates to the publication of the material that has a tendency to interfere with the pending proceedings.

24. The New Zealand Approach: It recognizes the Open Justice principle. However, the courts have taken the view that the said principle is not absolute. It must be balanced against the object of doing justice. That, the right to freedom of expression must be balanced against other rights including the fundamental public interest in preserving the integrity of justice and the administration of justice.

Indian Approach to prior restraint

(i) Judicial decisions

25. At the outset, it may be stated that the Supreme Court is not only the sentinel of the fundamental rights but also a balancing wheel between the rights, subject to social control. Freedom of expression is one of the most cherished values of a free democratic society. It is indispensable to the operation of a democratic society whose basic postulate is that the government shall be based on the consent of the governed.

But, such a consent implies not only that the consent shall be free but also that it shall be grounded on adequate information, discussion and aided by the widest possible dissemination of

information and opinions from diverse and antagonistic sources. Freedom of expression which includes freedom of the press has a capacious content and is not restricted to expression of thoughts and ideas which are accepted and acceptable but also to those which offend or shock any section of the population. It also includes the right to receive information and ideas of all kinds from different sources. In essence, the freedom of expression embodies the right to know.

However, under our Constitution no right in Part III is absolute. Freedom of expression is not an absolute value under our Constitution. It must not be forgotten that no single value, no matter exalted, can bear the full burden of upholding a democratic system of government. Underlying our Constitutional system are a number of important values, all of which help to guarantee our liberties, but in ways which sometimes conflict. Under our Constitution, probably, no values are absolute. All important values, therefore, must be qualified and balanced against, other important, and often competing, values. This process of definition, qualification and balancing is as much required with respect to the value of freedom of expression as it is for other values. Consequently, free speech, in appropriate cases, has got to correlate with fair trial. It also follows that in appropriate case one right [say freedom of expression] may have to yield to the other right like right to a fair trial. Further, even Articles 14 and 21 are subject to the test of reasonableness after the judgment of this Court in the case of Maneka Gandhi v. Union of India [(1978) 1 SCC

248].

Decisions of the Supreme Court on "prior restraint"

26. In Brij Bhushan v. State of Delhi [AIR 1950 SC 129], this Court was called upon to balance exercise of freedom of expression and pre-censorship. This Court declared the statutory provision as unconstitutional inasmuch as the restrictions imposed by it were outside Article 19(2), as it then stood. However, this Court did not say that pre-censorship per se is unconstitutional.

27. In Virendra v. State of Punjab [AIR 1957 SC 896], this Court upheld pre-censorship imposed for a limited period and right of representation to the government against such restraint under Punjab Special Powers (Press) Act, 1956. However, in the same judgment, another provision imposing pre-censorship but without providing for any time limit or right to represent against pre-censorship was struck down as unconstitutional.

28. In the case of K.A. Abbas v. Union of India [AIR 1971 SC 481], this Court upheld prior restraint on exhibition of motion pictures subject to Government setting up a corrective machinery and an independent Tribunal and reasonable time limit within which the decision had to be taken by the censoring authorities.

29. At this stage, we wish to clarify that the reliance on the above judgments is only to show that "prior restraint" per se has not been rejected as constitutionally impermissible. At this stage, we may point out that in the present IAs we are dealing with the concept of "prior restraint" per se and not with cases of misuse of powers of pre-censorship which were corrected by the Courts [see Binod Rao v. Minocher Rustom Masani reported in 78 Bom LR 125 and C. Vaidya v. D'Penha decided by Gujarat High Court in Sp. CA 141 of 1976 on 22.03.1976 (unreported)]

30. The question of prior restraint arose before this Court in 1988, in the case of Reliance Petrochemicals Ltd. v. Proprietors of Indian Express Newspapers Bombay (P) Ltd. [AIR 1989 SC 190] in the context of publication in one of the national dailies of certain articles which contained adverse comments on the proposed issue of debentures by a public limited company. The validity of the debenture was sub judice in this Court. Initially, the court granted injunction against the press restraining publication of articles on the legality of the debenture issue.

The test formulated was that any preventive injunction against the press must be "based on reasonable grounds for keeping the administration of justice unimpaired" and that, there must be reasonable ground to believe that the danger apprehended is real and imminent. The Court went by the doctrine propounded by Holmes J of "clear and present danger". This Court treated the said doctrine as the basis of balance of convenience test. Later on, the injunction was lifted after

subscription to debentures had closed.

31. In the case of Naresh Shridhar Mirajkar v. State of Maharashtra [AIR 1967 SC 1], this Court dealt with the power of a court to conduct court proceedings in camera under its inherent powers and also to incidentally prohibit publication of the court proceedings or evidence of the cases outside the court by the media. It may be stated that "open Justice" is the cornerstone of our judicial system. It instills faith in the judicial and legal system. However, the right to open justice is not absolute. It can be restricted by the court in its inherent jurisdiction as done in Mirajkar's case if the necessities of administration of justice so demand [see Kehar Singh v. State (Delhi Administration), AIR 1988 SC 1883]. Even in US, the said principle of open justice yields to the said necessities of administration of justice [see: Globe Newspaper Co. v. Superior Court, 457 US 596]. The entire law has been reiterated once again in the judgment of this Court in Mohd. Shahabuddin v. State of Bihar [(2010) 4 SCC 653], affirming judgment of this Court in Mirajkar's case.

32. Thus, the principle of open justice is not absolute. There can be exceptions in the interest of administration of justice. In Mirajkar, the High Court ordered that the deposition of the defence witness should not be reported in the newspapers. This order of the High Court was challenged in this Court under Article 32. This Court held that apart from Section 151 of the Code of Civil Procedure, the High Court had the inherent power to restrain the press from reporting where administration of justice so demanded. This Court held vide para 30 that evidence of the witness need not receive excessive publicity as fear of such publicity may prevent the witness from speaking the truth. That, such orders prohibiting publication for a temporary period during the course of trial are permissible under the inherent powers of the court whenever the court is satisfied that interest of justice so requires. As to whether such a temporary prohibition of publication of court proceedings in the media under the inherent powers of the court can be said to offend Article 19(1)(a) rights [which includes freedom of the press to make such publication], this Court held that an order of a court passed to protect the interest of justice and the administration of justice could not be treated as violative of Article 19(1)(a) [see para 12]. The judgment of this Court in Mirajkar is delivered by a Bench of 9-Judges and is binding on this Court.

33. At this stage, it may be noted that the judgment of the Privy Council in the case of Independent Publishing Co. Ltd. v. AG of Trinidad and Tobago [2005 (1) AC 190] has been doubted by the Court of Appeal in New Zealand in the case of Vincent v. Solicitor General [(2012) NZCA 188 dated 11.5.2012]. In any event, on the inherent powers of the Courts of Record we are bound by the judgment of this Court in Mirajkar. Thus, Courts of Record under Article 129/Article 215 have inherent powers to prohibit publication of court proceedings or the evidence of the witness. The judgments in Reliance Petrochemicals Ltd. and Mirajkar were delivered in civil cases. However, in Mirajkar, this Court held that all Courts which have inherent powers, i.e., the Supreme Court, the High Courts and Civil Courts can issue prior restraint orders or proceedings, prohibitory orders in exceptional circumstances temporarily prohibiting publications of Court proceedings to be made in the media and that such powers do not violate Article 19(1)(a). Further, it is important to note, that, one of the Heads on which Article 19(1)(a) rights can be restricted is in relation to "contempt of court" under Article 19(2). Article 19(2) preserves common law of contempt as an "existing law". In fact, the Contempt of Courts Act, 1971 embodies the common law of contempt. At this stage, it is suffice to state that the Constitution framers were fully aware of the Institution of Contempt under the common law which they have preserved as "existing law" under Article 19(2) read with Article 129 and Article 215 of Constitution. The reason being that contempt is an offence sui generis. The Constitution framers were aware that the law of contempt is only one of the ways in which administration of justice is protected, preserved and furthered. That, it is an important adjunct to the criminal process and provides a sanction. Other civil courts have the power under Section 151 of Code of Civil Procedure to pass orders prohibiting publication of court proceedings. In Mirajkar, this Court referred to the principles governing Courts of Record under Article 215 [see para 60]. It was held that the High Court is a Superior Court of Record and that under Article 215

it has all the powers of such a court including the power to punish contempt of itself. At this stage, the word "including" in Article 129/Article 215 is to be noted. It may be noted that each of the Articles is in two parts. The first part declares that the Supreme Court or the High Court "shall be a Court of Record and shall have all the powers of such a court". The second part says "includes the powers to punish for contempt". These Articles save the pre-existing powers of the Courts as courts of record and that the power includes the power to punish for contempt [see Delhi Judicial Service Association v. State of Gujarat [(1991) 4 SCC 406] and Supreme Court Bar Association v. Union of India [(1998) 4 SCC 409]. As such a declaration has been made in the Constitution that the said powers cannot be taken away by any law made by the Parliament except to the limited extent mentioned in Article 142(2) in the matter of investigation or punishment of any contempt of itself. If one reads Article 19(2) which refers to law in relation to Contempt of Court with the first part of Article 129 and Article 215, it becomes clear that the power is conferred on the High Court and the Supreme Court to see that

"the administration of justice is not perverted, prejudiced, obstructed or interfered with". To see that the administration of justice is not prejudiced or perverted clearly includes power of the Supreme Court/High Court to prohibit temporarily, statements being made in the media which would prejudice or obstruct or interfere with the administration of justice in a given case pending in the Supreme Court or the High Court or even in the subordinate courts. In view of the judgment of this Court in A.K. Gopalan v. Noordeen [(1969) 2 SCC 734], such statements which could be prohibited temporarily would include statements in the media which would prejudice the right to a fair trial of a suspect or accused under Article 21 from the time when the criminal proceedings in a subordinate court are imminent or where suspect is arrested. This Court has held in Ram Autar Shukla v. Arvind Shukla [1995 Supp (2) SCC 130] that the law of contempt is a way to prevent the due process of law from getting perverted. That, the words "due course of justice" in Section 2 (c) or Section 13 of the 1971 Act are wide enough and are not limited to a particular judicial proceedings. That, the meaning of the words "contempt of court" in Article 129 and Article 215 is wider than the definition of "criminal contempt" in Section 2 (c) of the 1971 Act. Here, we would like to add a caveat. The contempt of court is a special jurisdiction to be exercised sparingly and with caution whenever an act adversely affects the administration of justice [see Nigel Lowe and Brenda Sufrin, Law of Contempt (Third Edition)]. Trial by newspaper comes in the category of acts which interferes with the course of justice or due administration of justice [see Nigel Lowe and Brenda Sufrin, page 5 of Fourth Edition]. According to Nigel Lowe and Brenda Sufrin [page 275] and also in the context of second part of Article 129 and Article 215 of the Constitution the object of the contempt law is not only to punish, it includes the power of the Courts to prevent such acts which interfere, impede or pervert administration of justice. Presumption of innocence is held to be a human right. [See : Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra (2005) 5 SCC 294]. If in a given case the appropriate Court finds infringement of such presumption by excessive prejudicial publicity by the newspapers (in general), then under inherent powers, the Courts of Record suo motu or on being approached or on report being filed before it by subordinate court can under its inherent powers under Article 129 or Article 215 pass orders of postponement of publication for a limited period if the applicant is able to demonstrate substantial risk of prejudice to the pending trial and provided he is able to displace the presumption of open Justice and to that extent the burden will

be on the applicant who seeks such postponement of offending publication.

34. The above discussion shows that in most jurisdictions there is power in the courts to postpone reporting of judicial proceedings in the interest of administration of justice. Under Article 19(2) of the Constitution, law in relation to contempt of court, is a reasonable restriction. It also satisfies the test laid down in the judgment of this Court in R. Rajagopal v. State of T.N. [(1994) 6 SCC 632]. As stated, in most common law jurisdictions, discretion is given to the courts to evolve neutralizing devices under contempt jurisdiction such as postponement of the trial, re-trials, change of venue and in appropriate cases even to grant acquittals in cases of excessive media prejudicial publicity. The very object behind empowering the courts to devise such methods is to see that the administration of justice is not perverted, prejudiced, obstructed or interfered with. At the same time, there is a presumption of Open Justice under the common law. Therefore, courts have evolved mechanisms such as postponement of publicity to balance presumption of innocence, which is now recognized as a human right in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra (supra) vis-à-vis presumption of Open Justice. Such an order of postponement has to be passed only when other alternative measures such as change of venue or postponement of trial are not available. In passing such orders of postponement, courts have to keep in mind the principle of proportionality and the test of necessity. The applicant who seeks order of postponement of publicity must displace the presumption of Open Justice and only in such cases the higher courts shall pass the orders of postponement under Article 129/Article 215 of the Constitution. Such orders of postponement of publicity shall be passed for a limited period and subject to the courts evaluating in each case the necessity to pass such orders not only in the context of administration of justice but also in the context of the rights of the individuals to be protected from prejudicial publicity or mis-information, in other words, where the court is satisfied that Article 21 rights of a person are offended. There is no general law for courts to postpone publicity, either prior to adjudication or during adjudication as it would depend on facts of each case. The necessity for any such order would depend on extent of prejudice, the effect on individuals involved in the case, the over-riding necessity to curb the right to report judicial proceedings conferred on the media under Article 19(1)(a) and the right of the media to challenge the order of postponement.

(ii) Contempt of Courts Act, 1971

35. Section 2 defines "contempt", "civil contempt" and "criminal contempt". In the context of contempt on account of publications which are not fair and accurate publication of court proceedings, the relevant provisions are contained in Sections 4 and 7 whereas Section 13 is a general provision which deals with defences. It will be noticed that Section 4 deals with "report of a judicial proceeding". A person is not to be treated as guilty of contempt if he has published such a report which is fair and accurate. Section 4 is subject to the provisions of Section 7 which, however, deals with publication of "information" relating to "proceedings in chambers". Here the emphasis is on "information" whereas in Section 4, emphasis is on "report of a judicial proceeding". This distinction between a "report of proceedings" and "information" is necessary because Section 7 deals with proceedings in camera where there is no access to the media. In this

connection, the provisions of Section 13 have to be borne in mind. The inaccuracy of reporting of court proceedings will be contempt only if it can be said on the facts of a particular case, to amount to substantial interference with the administration of justice. The reason behind Section 4 is to grant a privilege in favour of the person who makes the publication provided it is fair and accurate. This is based on the presumption of "open justice" in courts. Open justice permits fair and accurate reports of court proceedings to be published. The media has a right to know what is happening in courts and to disseminate the information to the public which enhances the public confidence in the transparency of court proceedings. As stated above, sometimes, fair and accurate reporting of the trial (say a murder trial) would nonetheless give rise to substantial risk of prejudice not in the pending trial but in the later or connected trials. In such cases, there is no other practical means short of postponement orders that is capable of avoiding such risk of prejudice to the later or connected trials. Thus, postponement order not only safeguards fairness of the later or connected trials, it prevents possible contempt by the Media.

(iii) "Order of Postponement" of publication- its nature and Object

36. As stated, in US such orders of postponement are treated as restraints which offend the First Amendment and as stated courts have evolved neutralizing techniques to balance free speech and fair trial whereas in Canada they are justified on the touchstone of Section 1 of the Charter of Rights. What is the position of such Orders under Article 19(1)(a) and under Article 21?

37. Before examining the provisions of Article 19(1)(a) and Article 21, it may be reiterated, that, the right to freedom of speech and expression, is absolute under the First Amendment in the US Constitution unlike Canada and India where we have the test of justification in the societal interest which saves the law despite infringement of the rights under Article 19(1)(a). In India, we have the test of "reasonable restriction" in Article 19(2). In the case of Secretary, Ministry of Information & Broadcasting, Govt. of India v. Cricket Association of Bengal [(1995) 2 SCC 161] it has been held that "it is true that Article 19(2) does not use the words "national interest", "interest of society" or "public interest" but the several grounds mentioned in Article 19(2) for imposition of restrictions such as security of the State, public order, law in relation to contempt of court, defamation etc. are ultimately referable to societal interest which is another name for public interest" [para 189]. It has been further held that, "the said grounds in Article 19(2) are conceived in the interest of ensuring and maintaining conditions in which the said right can meaningfully be exercised by the citizens of this country" [para 151].

38. In the case of E.M.S. Namboodripad v. T. Narayanan Nambiar [AIR 1970 SC 2015] it has been held that "the existence of law containing its own guiding principles, reduces the discretion of the Courts to the minimum. But where the law [i.e. 1971 Act] is silent the Courts have discretion" [para 30]. This is more so when the said enactment is required to be interpreted in the light of Article 21. We would like to quote herein below para 6 of the above judgment which reads as under :

"The law of contempt stems from the right of the courts to punish by imprisonment or fines persons guilty of words or acts which either obstruct or tend to obstruct the administration of justice. This right is exercised in India by all courts when contempt is committed in facie curaie and by the superior courts on their own behalf or on behalf of courts subordinate to them even if committed outside the courts. Formerly, it was regarded as inherent in the powers of a court of record and now by the Constitution of India, it is a part of the powers of the Supreme Court and the High Courts."

39. The question before us is whether such "postponement orders" constitute restrictions under Article 19(2) as read broadly by this Court in the case of Cricket Association of Bengal (supra)?

40. As stated, right to freedom of expression under the First Amendment in US is absolute which is not so under Indian Constitution in view of such right getting restricted by the test of reasonableness and in view of the Heads of Restrictions under Article 19(2). Thus, the clash model is more suitable to American Constitution rather than Indian or Canadian jurisprudence, since First Amendment has no equivalent of Article 19(2) or Section 1 of the Canadian Charter. This has led the American Courts, in certain cases, to evolve techniques or methods to be applied in cases where on account of excessive prejudicial publicity, there is usurpation of court's functions. These are techniques such as retrials being ordered, change of venue, ordering acquittals even at the Appellate stage, etc. In our view, orders of postponement of publications/ publicity in appropriate cases, as indicated above, keeping in mind the timing (the stage at which it should be ordered), its duration and the right of appeal to challenge such orders is just a neutralizing device, when no other alternative such as change of venue or postponement of trial is available, evolved by courts as a preventive measure to protect the press from getting prosecuted for contempt and also to prevent administration of justice from getting perverted or prejudiced.

(iv) Width of the postponement orders

41. The question is - whether such "postponement orders" constitute restriction under Article 19(1)(a) and whether such restriction is saved under Article 19(2)?

42. At the outset, we must understand the nature of such orders of postponement. Publicity postponement orders should be seen, in the context of Article 19(1)(a) not being an absolute right. The US clash model based on collision between freedom of expression (including free press) and the right to a fair trial will not apply to Indian Constitution. In certain cases, even accused seeks publicity (not in the pejorative sense) as openness and transparency is the basis of a fair trial in which all the stakeholders who are a party to a litigation including the judges are under scrutiny and at the same time people get to know what is going on inside the court rooms. These aspects come within the scope of Article 19(1) and Article 21. When rights of equal weight clash, Courts have to evolve balancing techniques or measures based on re-calibration under which both the rights are given equal space in the Constitutional Scheme and this is what the "postponement order" does subject to the parameters, mentioned hereinafter. But, what happens when courts are required to balance important public interests placed side by side. For example, in cases where presumption of open justice has to be balanced with presumption of innocence, which as stated above, is now recognized as a human right. These presumptions existed at the time when the Constitution was framed [existing law under Article 19(2)] and they continue till date not only as part of rule of law under Article 14 but also as an Article 21 right. The constitutional protection in Article 21 which protects the rights of the person for a fair trial is, in law, a valid restriction operating on the right to free speech under Article 19(1)(a), by virtue of force of it being a constitutional provision. Given that the postponement orders curtail the freedom of expression of third parties, such orders have to be passed only in cases in which there is real and substantial risk of prejudice to fairness of the trial or to the proper administration of justice which in the words of Justice Cardozo is "the end and purpose of all laws". However, such orders of postponement should be ordered for a limited duration and without disturbing the content of the publication. They should be passed only when necessary to prevent real and substantial risk to the fairness of the trial (court proceedings), if reasonable alternative methods or measures such as change of venue or postponement of trial will not prevent the said risk and when the salutary effects of such orders outweigh the deleterious effects to the free expression of those affected by the prior restraint. The order of postponement will only be appropriate in cases where the balancing test otherwise favours non-publication for a limited period. It is not possible for this Court to enumerate categories of publications amounting to contempt. It would require the courts in each case to see the content and the context of the offending publication. There cannot be any straightjacket formula enumerating such categories. In our view, keeping the above parameters, if the High Court/ Supreme Court (being Courts of Record) pass postponement orders under their inherent jurisdictions, such orders would fall within "reasonable restrictions" under Article 19(2) and which would be in conformity with societal interests, as held in the case of Cricket Association of Bengal (supra). In this connection, we must also keep in mind the language of Article 19(1) and Article 19(2). Freedom of press has been read into Article 19(1)(a). After the judgment of this Court in Maneka Gandhi (supra, p. 248), it is now well-settled that test of reasonableness applies not only to Article 19(1) but also to Article 14 and Article 21. For example, right to access courts under Articles 32, 226 or 136 seeking relief against infringement of say Article 21 rights has not been specifically mentioned in Article 14. Yet, this right has been deduced from the words "equality before the law" in Article 14. Thus, the test of reasonableness which applies in Article 14 context would equally apply to Article 19(1) rights. Similarly, while judging reasonableness of an enactment even Directive Principles have been taken into consideration by this Court in several cases [see recent judgment of this Court in Society for Un-aided Private Schools of Rajasthan v. U.O.I. 2012 (4) SCALE 272.

Similarly, in the case of Dharam Dutt v. Union of India reported in (2004) 1 SCC 712, it has been held that rights not included in Article 19(1)(c) expressly, but which are deduced from the express language of the Article are concomitant rights, the restrictions thereof would not merely be those in Article 19(4)]. Thus, balancing of such rights or equal public interest by order of postponement of publication or publicity in cases in which there is real and substantial risk of prejudice to the proper administration of justice or to the fairness of trial and within the above enumerated parameters of necessity and proportionality would satisfy the test of reasonableness in Articles 14 and 19(2). One cannot say that what is reasonable in the context of Article 14 or Article 21 is not reasonable when it comes to Article 19(1)(a). Ultimately, such orders of postponement are only to balance conflicting public interests or rights in Part III of Constitution. They also satisfy the requirements of justification under Article 14 and Article 21. Further, we must also keep in mind the words of Article 19(2) "in relation to contempt of court". At the outset, it may be stated that like other freedoms, clause 1(a) of Article 19 refers to the common law right of freedom of expression and does not apply to any right created by the statute (see page 275 of Constitution of India by D.D. Basu, 14th edition). The above words "in relation to" in Article 19(2) are words of widest amplitude. When the said words are read in relation to contempt of court, it follows that the law of contempt is treated as reasonable restriction as it seeks to prevent administration of justice from getting perverted or prejudiced or interfered with. Secondly, these words show that the expression "contempt of court" in Article 19(2) indicates that the object behind putting these words in Article 19(2) is to regulate and control administration of justice. Thirdly, if one reads Article 19(2) with the second part of Article 129 or Article 215, it is clear that the contempt action does not exhaust the powers of the Court of Record. The reason being that contempt is an offence sui generis. Common law defines what is the scope of contempt or limits of contempt. Article 142(2) operates only in a limited field. It permits a law to be made restricted to investigations and punishment and does not touch the inherent powers of the Court of Record. Fourthly, in case of criminal contempt, the offending act must constitute interference with administration of justice. Contempt jurisdiction of courts of record forms part of their inherent jurisdiction under Article 129/ Article 215. Superior Courts of Record have inter alia inherent superintendent jurisdiction to punish contempt committed in connection with proceedings before inferior courts. The test is that the publication (actual and not planned publication) must create a real and substantial risk of prejudice to the proper administration of justice or to the fairness of trial. It is important to bear in mind that sometimes even fair and accurate reporting of the trial (say murder trial) could nonetheless give rise to the "real and substantial risk of serious prejudice" to the connected trials. In such cases, though rare, there is no other practical means short of postponement orders that is capable of avoiding the real and substantial risk of prejudice to the connected trials. Thus, postponement orders safeguard fairness of the connected trials.

The principle underlying postponement orders is that it prevents possible contempt. Of course, before passing postponement orders, Courts should look at the content of the offending publication (as alleged) and its effect. Such postponement orders operate on actual publication. Such orders direct postponement of the publication for a limited period. Thus, if one reads Article 19(2), Article 129/ Article 215 and Article 142(2), it is clear that Courts of Record "have all the powers including power to punish" which means that Courts of Record have the power to postpone publicity in appropriate cases as a preventive measure without disturbing its content.

Such measures protect the Media from getting prosecuted or punished for committing contempt and at the same time such neutralizing devices or techniques evolved by the Courts effectuate a balance between conflicting public interests. It is well settled that precedents of this Court under Article 141 and the Comparative Constitutional law helps courts not only to understand the provisions of the Indian Constitution it also helps the Constitutional Courts to evolve principles which as stated by Ronald Dworkin are propositions describing rights [in terms of its content and contours] (See "Taking Rights Seriously" by Ronald Dworkin, 5th Reprint 2010). The postponement orders is, as stated above, a neutralizing device evolved by the courts to balance interests of equal weightage, viz., freedom of expression vis-à-vis freedom of trial, in the context of the law of contempt. One aspect needs to be highlighted. The shadow of the law of contempt hangs over our jurisprudence. The media, in several cases in India, is the only representative of the public to bring to the notice of the court issues of public importance including governance deficit, corruption, drawbacks in the system. Keeping in mind the important role of the media, Courts have evolved several neutralizing techniques including postponement orders subject to the twin tests of necessity and proportionality to be applied in cases where there is real and substantial risk of prejudice to the proper administration of justice or to the fairness of trial.

Such orders would also put the Media to notice about possible contempt. However, it would be open to Media to challenge such orders in appropriate proceedings. Contempt is an offence sui generis. Purpose of Contempt Law is not only to punish. Its object is to preserve the sanctity of administration of justice and the integrity of the pending proceeding. Thus, the postponement order is not a punitive measure, but a preventive measure as explained hereinabove. Therefore, in our view, such orders of postponement, in the absence of any other alternative measures such as change of venue or postponement of trial, satisfy the requirement of justification under Article 19(2) and they also help the Courts to balance conflicting societal interests of right to know vis-à-vis another societal interest in fair administration of justice. One more aspect needs to be mentioned. Excessive prejudicial publicity leading to usurpation of functions of the Court not only interferes with administration of justice which is sought to be protected under Article 19(2), it also prejudices or interferes with a particular legal proceedings. In such case, Courts are duty bound under inherent jurisdiction, subject to above parameters, to protect the presumption of innocence which is now recognised by this Court as a human right under Article 21, subject to the applicant proving displacement of such a presumption in appropriate proceedings. Lastly, postponement orders must be integrally connected to the outcome of the proceedings including guilt or innocence of the accused, which would depend on the facts of each case. For aforestated reasons, we hold that subject to above parameters, postponement orders fall under Article 19(2) and they satisfy the test of reasonableness.

(v) Right to approach the High Court/ Supreme Court

43. In the light of the law enunciated hereinabove, anyone, be he an accused or an aggrieved person, who genuinely apprehends on the basis of the content of the publication and its effect, an infringement of his/ her rights under Article 21 to a fair trial and all that it comprehends, would be entitled to approach an appropriate writ court and seek an order of postponement of the offending publication/ broadcast or postponement of reporting of certain phases of the trial (including identity of the victim or the witness or the complainant), and that the court may grant such preventive relief, on a balancing of the right to a fair trial and Article 19(1)(a) rights, bearing in mind the abovementioned principles of necessity and proportionality and keeping in mind that such orders of postponement should be for short duration and should be applied only in cases of real and substantial risk of prejudice to the proper administration of justice or to the fairness of trial. Such neutralizing device (balancing test) would not be an unreasonable restriction and on the contrary would fall within the proper constitutional framework.

Maintainability

44. As stated above, in the present case, we heard various stake holders as an important question of public importance arose for determination. Broadly, on maintainability the following contentions were raised:

(i) the proceedings were not maintainable as there is no lis;

(ii) there is a difference between law-making and framing of guidelines. That, law can be made only by Parliament. That, guidelines to be framed by the Court, therefore, should be self-regulatory or at the most advisory.

(iii) under Article 142, this Court cannot invest courts or any other authority with jurisdiction, adjudicatory or otherwise, which they do not possess.

45. Article 141 uses the phrase "law declared by the Supreme Court." It means law made while interpreting the statutes or the Constitution. Such judicial law-making is part of the judicial process. Further under Article 141, law-making through interpretation and expansion of the meanings of opentextured expressions such as "law in relation to contempt of court" in Article 19(2), "equal protection of law", "freedom of speech and expression" and "administration of justice" is a legitimate judicial function. According to Ronald Dworkin,

"Arguments of principle are arguments intended to establish an individual right. Principles are propositions that describe rights." [See "Taking Rights Seriously" by Ronald Dworkin, 5^th Reprint 2010, p. 90]. In this case, this Court is only declaring under Article 141, the constitutional limitations on free speech under Article 19(1)(a), in the context of Article 21. The exercise undertaken by this Court is an exercise of exposition of constitutional limitations under Article 141 read with Article 129/Article 215 in the light of the contentions and large number of authorities referred to by the counsel on Article 19(1)(a), Article 19(2), Article 21, Article 129 and Article 215 as also the "law of contempt" insofar as interference with administration of justice under the common law as well as under Section 2(c) of 1971 Act is concerned. What constitutes an offending publication would depend on the decision of the court on case to case basis. Hence, guidelines on reporting cannot be framed across the Board. The shadow of "law of contempt" hangs over our jurisprudence. This Court is duty bound to clear that shadow under Article 141. The phrase "in relation to contempt of court" under Article 19(2) does not in the least describe the true nature of the offence which consists in interfering with administration of justice; in impending and perverting the course of justice. That is all which is done by this judgment. We have exhaustively referred to the contents of the IAs filed by Sahara and SEBI. As stated above, the right to negotiate and settle in confidence is a right of a citizen and has been equated to a right of the accused to defend himself in a criminal trial. In this case, Sahara has complained to this Court on the basis of breach of confidentiality by the Media. In the circumstances, it cannot be contended that there was no lis. Sahara, therefore, contended that this Court should frame guidelines or give directions which are advisory or self-regulatory whereas SEBI contended that the guidelines/directions should be given by this Court which do not have to be coercive. In the circumstances, constitutional adjudication on the above points was required and it cannot be said that there was no lis between the parties. We reiterate that the exposition of constitutional limitations has been done under Article 141 read with Article 129/Article 215. When the content of rights is considered by this Court, the Court has also to consider the enforcement of the rights as well as the remedies available for such enforcement. In the circumstances, we have expounded the constitutional limitations on free speech under Article 19(1)(a) in the context of Article 21 and under Article 141 read with Article 129/Article 215 which preserves the inherent jurisdiction of the Courts of Record in relation to contempt law. We do not wish to enumerate categories of publication amounting to contempt as the Court(s) has to examine the content and the context on case to case basis.

Conclusion

46. Accordingly, IA Nos. 4-5 and 10 are disposed of.

47. For the reasons given above, we do not wish to express any opinion on the merit of the other IAs. Consequently, they are dismissed.

New Delhi;

September 11, 2012

…..……………………….......CJI

(S. H. Kapadia)

.........…………………………..J.

(D.K. Jain)

.........…………………………..J.

(Surinder Singh Nijjar)

.........…………………………..J.

(Ranjana Prakash Desai)

.........…………………………..J.

(Jagdish Singh Khehar)

Trial cannot be terminated merely on the ground of delay without considering the reasons

Posted on 11 September 2012 by Apurba Ghosh

Court

Supreme Court of India

Brief

The petitioners herein are the accused and tried for the assassination of Shri. L.N. Mishra, the then Union Railway Minister. It is the case of the prosecution that Shri. L.N. Mishra was injured in a bomb-blast at the Railway Station, Samastipur on 2.01.1975 and later succumbed to his injuries on 3.01.1975. The initial investigation was conducted by the Bihar C.I.D. and subsequently it was transferred to the Central Bureau of Investigation (for short, 'C.B.I.') who filed charge sheet on 10.11.1975. Thereafter, this case was transferred by this Court to Delhi vide its order dated 17.12.1979 due to interference by the then Bihar Government. Learned Additional Sessions Judge, Karkardooma, Delhi, after framing the charges, initiated trial against the accused persons but, unfortunately, the trial is still pending for the past 37 years. In 1987, the Petitioner(s) had preferred a Writ Petition (Crl.) No. 268/87 before this Court for quashing of the charges and proceedings in view of pending trial for over 12 years. This Court had disposed of the writ petitions vide its Order dated 10.12.1991 with a direction to the trial court to expeditiously complete the trial on day to day basis. However, the trial is still pending before the Learned Additional Sessions Judge despite the direction of this Court to expeditiously complete the trial. As of now, the statements of accused under Section 313 of the Criminal Procedure Core (for short, 'Cr. P.C.') have been recorded, the Court witnesses have been examined as well as the recording of statements of defence witness is also complete and at the time of hearing of these petitions, we are informed by the learned counsel that the matter is now posted for arguments.

Citation

Ranjan Dwivedi ...Petitioner(s) Versus C.B.I., Through the Director General ...Respondent(s)

Judgement

IN THE SUPREME COURT OF INDIA

CRIMINAL WRIT JURISDICTION

WRI T PETITIO N (CRL. ) NO . 20 0 OF 201 1

Ranjan Dwivedi ...Petitioner(s)

Versus

C.B.I., Through the Director General ...Respondent(s)

WITH

WRI T PETITIO N (CRL. ) NO. 20 5 OF 201 1

Ac. Sudevananda Avadhuta ...Petitioner(s)

Versus

C.B.I., Through the Director General ...Respondent(s)

J U D G M E N T

H. L. DATTU , J.

1. Reliefs sought in both the Writ Petitions are one and the same; therefore, they are disposed of by this common judgment.

2. These Criminal Writ Petitions, filed under Article 32 of the Constitution of India, seek for the enforcement of petitioner's fundamental right of "speedy trial" and for "quashing of Sessions Trial No. SC1/06", pending on the file of learned Additional Sessions Judge (East), Kakardooma Courts, Delhi.

3. The petitioners herein are the accused and tried for the assassination of Shri. L.N. Mishra, the then Union Railway Minister. It is the case of the prosecution that Shri. L.N. Mishra was injured in a bomb-blast at the Railway Station, Samastipur on 2.01.1975 and later succumbed to his injuries on 3.01.1975. The initial investigation was conducted by the Bihar C.I.D. and subsequently it was transferred to the Central Bureau of Investigation (for short, 'C.B.I.') who filed charge sheet on 10.11.1975. Thereafter, this case was transferred by this Court to Delhi vide its order dated 17.12.1979 due to interference by the then Bihar Government. Learned Additional Sessions Judge, Karkardooma, Delhi, after framing the charges, initiated trial against the accused

persons but, unfortunately, the trial is still pending for the past 37 years. In 1987, the Petitioner(s) had preferred a Writ Petition (Crl.) No. 268/87 before this Court for quashing of the charges and proceedings in view of pending trial for over 12 years. This Court had disposed of the writ petitions vide its Order dated 10.12.1991 with a direction to the trial court to expeditiously complete the trial on day to day basis.

However, the trial is still pending before the Learned Additional Sessions Judge despite the direction of this Court to expeditiously complete the trial. As of now, the statements of accused under Section 313 of the Criminal Procedure Core (for short, 'Cr. P.C.') have been recorded, the Court witnesses have been examined as well as the recording of statements of defence witness is also complete and at the time of hearing of these petitions, we are informed by the learned counsel that the matter is now posted for arguments.

4. In view of delay in completion of trial for more than 37 years from date of the trial till date, the Petitioners have preferred the present Writ Petitions praying for quashing of the charges and trial.

5. Shri. T.R. Andhyarujina, learned Senior Counsel submits that the trial in the present case has been dragged on for more than 37 years and is still continuing and this amounts to violation of fundamental right of the accused to get speedy trial. He would submit that this Court has declared that right to speedy trial is a requirement under Article 21 of the Constitution guaranteeing right to life and liberty of a citizen. He would submit that better part of the life of the accusedPage petitioner has already been spent in the jail during trial and still, his fate is hanging in balance. He would contend that whether the accused would get convicted or acquitted is immaterial. The question here is; whether any judicial system would tolerate such as inordinate delay? Should the Supreme Court allow it to continue any more? He would further contend that this is a unique case for two reasons. Firstly, the prolongation of criminal trial is as long as 37 years and petitioners have spent better part of their human life in the jail. Secondly, this Court in the year 1991 while disposing of the petitioners writ petition, had issued specific directions to the trial court to expeditiously complete the trial, which mandate has been conveniently ignored by the trial court, which amounts to total ignorance and indifference to the directions issued by this Court. He would further contend that the fact that the judicial system works in a particular way cannot be a justification for its failure to complete the trial. He would submit that Article 21 not only protects the accused but also takes into consideration the sufferings faced by his family members.

He would submit systemic failure has sufficiently punished the petitioners and the very fact of delay shows prejudice caused to the petitioners. He would further submit that this is the ideal case where this Court can correct the short-fallings in the criminal justice delivery system by limiting the time for the completion of the trial. He would point out that this Court, on the earlier occasion, had issued direction to the trial court to expeditiously complete the trial on day to day basis, but even after two decades, the trial is still not complete in the year 2012. He would submit that this Court may quash the excruciatingly long trial on the ground that it is a unique case which has not only seriously prejudiced petitioners but also brutally violated their right to speedy trial, which is a part of their right to life. He would contend that in a case of delay of 10 to 15 years, this Court can order for expeditious completion of the trial, but not in a case where the delay is for more than 37 years, and therefore, this Court should certainly intervene and give quietus to the trial.

6. The Petitioner in W.P. (Crl.) No. 205 of 2011 is represented by Shri. Arvind Kumar, learned Counsel. He adopts the arguments canvassed by Shri. T.R. Andhyarujina, learned Senior Counsel.

7. Shri Raval, learned ASG submits that this Court has once rejected the plea of petitioners for quashing the trial on the ground of delay in December, 1991. Therefore, the petitioners are not entitled for the same relief which was once negatived by this Court. He would then submit, that, the prosecution is not responsible in any manner for the delay caused in the trial from December 1991 till date. He would read out a detailed list of dates pertaining to the proceedings and orders of the trial Court. He would further submit that prosecution has sought for adjournments only on three or four occasions for good and valid reasons and there is no deliberate intention on the part of the prosecution to postpone the trial. The learned ASG relies on the decision of this Court in State v. Narayan Waman Nerukar (Dr), (2002) 7 SCC

6. In the aid case, the accused was charged with the offences punishable under Sections 3 and 5 of the Official Secret Act and Section 120-B of the IPC. The Magistrate had taken cognizance vide its order dated 16.08.1999 and issued process. The accused approached the High Court for quashing of the criminal proceedings on the ground of delay. The High Court quashed the proceedings on the ground of unnecessary delay of 12 years. The prosecution approached this Court against the order of the High Court. This Court while setting aside the order of the High Court remanded the matter to the High Court for fresh disposal after considering all the relevant factors including that criminal courts are not obliged to terminate trial of criminal proceedings merely on account of lapse of time. This Court has observed, that, while considering the issue of delay in trial there are some relevant factors which ought to be taken into consideration by the court such as, whether the prolongation was on account of any delaying tactics adopted by the accused and other relevant aspects which contributed to the delay, number of witnesses examined, volume of documents likely to be exhibited, nature and complexity of the offence which is under investigation or adjudication. There can be no empirical formula of universal application in such matters. Each case has to be judged in its own background and special features, if any. No generalization is possible and should be done.

8. He would further rely on the decision of this Court in Vakil Prasad Singh v. State of Bihar (2009) 3 SCC 355, wherein the charge sheet was filed after the completion of investigation and subsequently, the learned Magistrate took cognizance vide its orders dated 20.02.1982, but nothing substantial did happen till 1987. Thereafter, the accused approached the High Court for fresh investigation as the Investigating Officer had no jurisdiction to investigate. The High Court vide its order dated 07.12.1990 quashed the order of cognizance taken by the Magistrate and ordered fresh investigation. Nothing was done till 1988. The accused again approached the High Court for quashing of entire criminal proceedings on the ground that re-investigation has not been initiated by the prosecuting agency. Subsequently, the reinvestigation was ordered only in the year 2007 and fresh charge-sheet was filed. The High Court dismissed such petition filed by the accused. However, this Court found that there is inordinate delay and has quashed the proceeding. This Court has observed that the speedy trial in all criminal prosecutions is an inalienable right under Article 21 of the Constitution. This right is applicable not only to the actual proceedings in court but also includes within its sweep the preceding police investigations as well. In every case, where the right to speedy trial is alleged to have been infringed, the court has to perform the balancing act by taking into consideration all the attendant circumstances, and

determine in each case as to whether the right to speedy trial has been actually denied in a given case.

9. Shri Raval further relied on the decision of this Court in Japani Sahoo v. Chandra Sekhar Mohanty, (2007) 7 SCC 394, in support of his argument that the general rule of criminal justice is that "a crime never dies". This Court noted that this principle is reflected in the well-known maxim nullum tempus aut locus occurrit regi (lapse of time is no bar to Crown in proceeding against offenders). This Court further observed that the Limitation Act, 1963 (for short the 'Act') does not apply to criminal proceedings unless there are express and specific provisions to that effect, for instance, Articles 114, 115, 131 and 132 of the Act. It is settled law that a criminal offence is considered as a wrong against the State and the society even though it has been committed against an individual. Normally, in serious offences, prosecution is launched by the State and a court of law has no power to throw away prosecution solely on the ground of delay. Mere delay in approaching a court of law would not by itself, afford a ground for dismissing the case, though it may be a relevant circumstance in reaching a final verdict.

10. Shri Raval also relied on the decision of this Court in P. Vijayan v. State of Kerala, (2010) 2 SCC 398, where one naxalite extremist was killed in a police encounter in 1970. However, in 1988, a newspaper article was published that the encounter in which the said naxalite was killed, was a fake one and some Senior Police Officers were responsible for it. On the basis of these reports, writ petitions were filed before the High Court of Kerala, wherein, one Constable filed a counter affidavit, making a confessional statement that he shot the said naxalite on the instructions of his Senior Officer. The High Court vide its order dated 27.01.1999, directed the CBI to register the F.I.R. for killing of the naxalite in a fake encounter. The accused preferred a petition under Section 227 of the Cr.P.C. before the trial court. The same was dismissed. Thereafter, the accused filed a Criminal Revision Petition before the High Court. The same was also dismissed. Being aggrieved, the accused approached this Court. This Court, while dismissing his appeal, has observed that at this stage, it cannot be claimed that there is no sufficient ground for proceeding against the appellant and discharge is the only course open. Further, whether the trial will end in conviction or acquittal is also immaterial. It is also observed that the question whether the materials at the hands of the prosecution are sufficient or not are matters for trial.

11. Shri Raval would conclude his submission by stating that the real purpose of the criminal proceedings is to find out the truth which can only be done after the conclusion of the trial.

12. We preface our decision by extracting certain observations made by this Court in Abdul Rehman Antulay v. R.S. Nayak, (1992) 1 SCC 225, Kartar Singh v. State of Punjab, (1994) 3 SCC 569 and P. Ramachandra Rao v. State of Karnataka, (2002) 4 SCC 578.

13. The Constitution Bench, in Abdul Rehman Antulay v. R.S. Nayak, (supra), has formulated certain propositions, 11 in number, meant to serve as guidelines. They are:

"86. In view of the above discussion, the following propositions emerge, meant to serve as guidelines. We must forewarn that these propositions are not exhaustive. It is difficult to foresee all situations. Nor is it possible to lay down any hard and fast rules. These propositions are:

(1) Fair, just and reasonable procedure implicit in Article 21 of the Constitution creates a right in the accused to be tried speedily. Right to speedy trial is the right of the accused. The fact that a speedy trial is also in public interest or that it serves the social interest also, does not make it any the less the right of the accused. It is in the interest of all concerned that the guilt or innocence of the accused is determined as quickly as possible in the circumstances.

(2) Right to speedy trial flowing from Article 21 encompasses all the stages, namely the stage of investigation, inquiry, trial, appeal, revision and re-trial. That is how, this Court has understood this right and there is no reason to take a restricted view.

(3) The concerns underlying the right to speedy trial from the point of view of the accused are:

(a) the period of remand and preconviction detention should be as short as possible. In other words, the accused should not be subjected to unnecessary or unduly long incarceration prior to his conviction;

(b) the worry, anxiety, expense and disturbance to his vocation and peace, resulting from an unduly prolonged investigation, inquiry or trial should be minimal; and

(c) undue delay may well result in impairment of the ability of the accused to defend himself, whether on account of death, disappearance or non-availability of witnesses or otherwise.

(4) At the same time, one cannot ignore the fact that it is usually the accused who is interested in

delaying the proceedings. As is often pointed out, "delay is a known defence tactic". Since the burden of proving the guilt of the accused lies upon the prosecution, delay ordinarily prejudices the prosecution. Non-availability of witnesses, disappearance of evidence by lapse of time really work against the interest of the prosecution. Of course, there may be cases where the prosecution, for whatever reason, also delays the proceedings. Therefore, in every case, where the right to speedy trial is alleged to have been infringed, the first question to be put and answered is - who is responsible for the delay? Proceedings taken by either party in good faith, to vindicate their rights and interest, as perceived by them, cannot be treated as delaying tactics nor can the time taken in pursuing such proceedings be counted towards delay. It goes without saying that frivolous proceedings or proceedings taken merely for delaying the day of reckoning cannot be treated as proceedings taken in good faith. The mere fact that an application/petition is admitted and an order of stay granted by a superior court is by itself no proof that the proceeding is not frivolous. Very often these stays are obtained on ex parte representation.

(5) While determining whether undue delay has occurred (resulting in violation of Right to Speedy Trial) one must have regard to all the attendant circumstances, including nature of offence, number of accused and witnesses, the workload of the court concerned, prevailing local conditions and so on — what is called, the systemic delays. It is true that it is the obligation of the State to ensure a speedy trial and State includes judiciary as well, but a realistic and practical approach should be adopted in such matters instead of a pedantic one.

(6) Each and every delay does not necessarily prejudice the accused. Some delays may indeed work to his advantage. As has been observed by Powell, J. in Barker "it cannot be said how long a delay is too long in a system where justice is supposed to be swift but deliberate". The same idea has been stated by White, J. in U.S. v. Ewell in the following words:

'... the Sixth Amendment right to a speedy trial is necessarily relative, is consistent with delays, and has orderly expedition, rather than mere speed, as its essential ingredients; and whether delay in completing a prosecution amounts to an unconstitutional deprivation of rights depends upon all the circumstances.' However, inordinately long delay may be taken as presumptive proof of prejudice. In this context, the fact of incarceration of accused will also be a relevant fact. The prosecution should not be allowed to become a persecution. But when does the prosecution become persecution, again depends upon the facts of a given case.

(7) We cannot recognize or give effect to, what is called the 'demand' rule. An accused cannot try himself; he is tried by the court at the behest of the prosecution. Hence, an accused's plea of denial of speedy trial cannot be defeated by saying that the accused did at no time demand a speedy trial. If in a given case, he did make such a demand and yet he was not tried speedily, it would be a plus point in his favour, but the mere non-asking for a speedy trial cannot be put against the accused. Even in USA, the relevance of demand rule has been substantially watered down in Barker and other succeeding cases.

(8) Ultimately, the court has to balance and weigh the several relevant factors - 'balancing test' or 'balancing process' - and determine in each case whether the right to speedy trial has been denied in a given case.

(9) Ordinarily speaking, where the court comes to the conclusion that right to speedy trial of an accused has been infringed the charges or the conviction, as the case may be, shall be quashed. But this is not the only course open. The nature of the offence and other circumstances in a given case may be such that quashing of proceedings may not be in the interest of justice. In such a case, it is open to the court to make such other appropriate order – including an order to conclude the trial within a fixed time where the trial is not concluded or reducing the sentence where the trial has concluded - as may be deemed just and equitable in the circumstances of the case.

(10) It is neither advisable nor practicable to fix any time-limit for trial of offences. Any such rule is bound to be qualified one. Such rule cannot also be evolved merely to shift the burden of proving justification on to the shoulders of the prosecution.

In every case of complaint of denial of right to speedy trial, it is primarily for the prosecution to justify and explain the delay. At the same time, it is the duty of the court to weigh all the circumstances of a given case before pronouncing upon the complaint. The Supreme Court of USA too has repeatedly refused to fix any such outer time-limit in spite of the Sixth Amendment. Nor do we think that not fixing any such outer limit ineffectuates the guarantee of right to speedy trial.

(11) An objection based on denial of right to speedy trial and for relief on that account, should first be addressed to the High Court. Even if the High Court entertains such a plea, ordinarily it should not stay the proceedings, except in a case of grave and exceptional nature. Such proceedings in High Court must, however, be disposed of on a priority basis."

14. In Kartar Singh v. State of Punjab, (supra), another Constitution Bench considered the right to speedy trial and opined that the delay is dependent on the circumstances of each case, because reasons for delay will vary. This Court held:

"84. The right to a speedy trial is a derivation from a provision of Magna Carta. This principle has also been incorporated into the Virginia Declaration of Rights of 1776 and from there into the Sixth Amendment of the Constitution of United States of America which reads, "In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial...". It may be pointed out, in this connection, that there is a Federal Act of 1974 called 'Speedy Trial Act' establishing a set of time-limits for carrying out the major events, e.g., information, indictment, arraignment, in the prosecution of criminal cases. [See Black's Law Dictionary, 6th Edn. page 1400].

85. The right to a speedy trial is not only an important safeguard to prevent undue and oppressive

incarceration, to minimise anxiety and concern accompanying the accusation and to limit the possibility of impairing the ability of an accused to defend himself but also there is a societal interest in providing a speedy trial. This right has been actuated in the recent past and the courts have laid down a series of decisions opening up new vistas of fundamental rights. In fact, lot of cases are coming before the courts for quashing of proceedings on the ground of inordinate and undue delay stating that the invocation of this right even need not await formal indictment or charge.

86. The concept of speedy trial is read into Article 21 as an essential part of the fundamental right to life and liberty guaranteed and preserved under our Constitution. The right to speedy trial begins with the actual restraint imposed by arrest and consequent incarceration and continues at all stages, namely, the stage of investigation, inquiry, trial, appeal and revision so that any possible prejudice that may result from impermissible and avoidable delay from the time of the commission of the offence till it consummates into a finality, can be averted. In this context, it may be noted that the constitutional guarantee of speedy trial is properly reflected in Section 309 of the Code of Criminal Procedure.

87. This Court in Hussainara Khatoon (I) v. Home Secretary, State of Bihar while dealing with Article 21 of the Constitution of India has observed thus:

(SCC p. 89, para 5)

"No procedure which does not ensure a reasonably quick trial can be regarded as 'reasonable, fair or just' and it would fall foul of Article 21. There can, therefore, be no doubt that speedy trial, and by speedy trial we mean reasonably expeditious trial, is an integral and essential part of the fundamental right to life and liberty enshrined in Article 21. The question which would, however, arise is as to what would be the consequence if a person accused of an offence is denied speedy trial and is sought to be deprived of his liberty by imprisonment as a result of a long delayed trial in violation of his fundamental right under Article 21. Would he be entitled to be released unconditionally freed from the charge leveled against him on the ground that trying him after an unduly long period of time and convicting him after such trial would constitute violation of his fundamental right under Article 21."

See also (1) Sunil Batra v. Delhi Administration (I), (2) Hussainara Khatoon (I) v. Home Secretary, State of Bihar, (3) Hussainara Khatoon (IV) v. Home Secretary, State of Bihar, Patna, (4) Hussainara Khatoon (VI) v. Home Secretary, State of Bihar, Govt. of Bihar, Patna, (5) Kadra Pahadia v. State of Bihar (II), (6) T.V. Vatheeswaran v. State of T.N., and (7) Abdul Rehman Antulay v. R.S. Nayak.

88. Thus this Court by a line of judicial pronouncements has emphasised and re-emphasised that speedy trial is one of the facets of the fundamental right to life and liberty enshrined in Article 21 and the law must ensure 'reasonable, just and fair' procedure which has a creative connotation after the decision of this Court in Maneka Gandhi."

The Court further observed:

"92. Of course, no length of time is per se too long to pass scrutiny under this principle nor the accused is called upon the show the actual prejudice by delay of disposal of cases. On the other hand, the court has to adopt a balancing approach by taking note of the possible prejudices and disadvantages to be suffered by the accused by avoidable delay and to determine whether the accused in a criminal proceeding has been deprived of his right of having speedy trial with unreasonable delay which could be identified by the factors –

(1) length of delay,

(2) the justification for the delay,

(3) the accused's assertion of his right to speedy trial, and

(4) prejudice caused to the accused by such delay.

However, the fact of delay is dependent on the circumstances of each case because reasons for delay will vary, such as delay in investigation on account of the widespread ramification of crimes and its designed network either nationally or internationally, the deliberate absence of witness or witnesses, crowded dockets on the file of the court etc."

15. Seven learned Judges of this Court in the case of P. Ramachandra Rao v. State of Karnataka, (supra), after an exhaustive consideration of the authorities on the subject, has observed:-

"29. For all the foregoing reasons, we are of the opinion that in Common Cause case (I) [as modified in Common Cause (II)] and Raj Deo Sharma (I) and (II) the Court could not have prescribed periods of limitation beyond which the trial of a criminal case or a criminal proceeding cannot continue and must mandatorily be closed followed by an order acquitting or discharging the accused. In conclusion we hold:

(1) The dictum in A.R. Antulay case is correct and still holds the field.

(2) The propositions emerging from Article 21 of the Constitution and expounding the right to speedy trial laid down as guidelines in A.R. Antulay case adequately take care of right to speedy trial. We uphold and reaffirm the said propositions.

(3) The guidelines laid down in A.R. Antulay case are not exhaustive but only illustrative. They are not intended to operate as hard-and-fast rules or to be applied like a straitjacket formula. Their applicability would depend on the fact situation of each case. It is difficult to foresee all situations and no generalization can be made.

(4) It is neither advisable, nor feasible, nor judicially permissible to draw or prescribe an outer limit for conclusion of all criminal proceedings. The time-limits or bars of limitation prescribed in the several directions made in Common Cause (I), Raj Deo Sharma (I) and Raj Deo Sharma (II) could not have been so prescribed or drawn and are not good law. The criminal courts are not obliged to terminate trial or criminal proceedings merely on account of lapse of time, as prescribed by the directions made in Common Cause case (I), Raj Deo Sharma case (I) and (II). At the most the periods of time prescribed in those decisions can be taken by the courts seized of the trial or proceedings to act as reminders when they may be persuaded to apply their judicial mind to the facts and circumstances of the case before them and determine by taking into consideration the several relevant factors as pointed out in A.R. Antulay case and decide whether the trial or proceedings have become so inordinately delayed as to be called oppressive and unwarranted. Such time-limits cannot and will not by themselves be treated by any court as a bar to further continuance of the trial or proceedings and as mandatorily obliging the court to terminate the same and acquit or discharge the accused.

(5) The criminal courts should exercise their available powers, such as those under Sections 309, 311 and 258 of the Code of Criminal Procedure to effectuate the right to speedy trial. A watchful and diligent trial Judge can prove to be a better protector of such right than any guidelines. In appropriate cases, jurisdiction of the High Court under Section 482 CrPC and Articles 226 and 227 of the Constitution can be invoked seeking appropriate relief or suitable directions.

(6) This is an appropriate occasion to remind the Union of India and the State Governments of their constitutional obligation to strengthen the judiciary — quantitatively and qualitatively — by providing requisite funds, manpower and infrastructure. We hope and trust that the Governments shall act."

16. The criminal case involving assassination of L. N. Misra, the then Union Minister for Railways, on January 02, 1975 is still pending in 2012, i.e. even after a lapse of thirty seven years. As a result, two of the accused has moved these petitions for acquittal. We have given our consideration to the submissions made by learned Senior Counsel, Shri Andhyarujina, who repeatedly emphasised that this case is the unique case and this Court has not seen such a case earlier and may not see in future. We do not intend to comment on this statement. We can only observe, that, our legal system has made life too easy for criminals and too difficult for law abiding citizens.

17. Our Constitution does not expressly declare that right to speedy trial as a fundamental right. The right to a speedy trial was first recognised in the Hussainara Khatoon's case, AIR 1979 SC 1360, wherein, the court held that a speedy trial is implicit in the broad sweep and content of Article 21 of the Constitution. Subsequently, in a series of judgments, this Court has held that 'reasonably' expeditious trial is an integral and essential part of the Fundamental Right to Life and Liberty enshrined in Article 21 of the Constitution of India.

18. The guarantee of a speedy trial is intended to avoid oppression and prevent delay by imposing on the court and the prosecution an obligation to proceed with the trial with a reasonable dispatch. The guarantee serves a threefold purpose. Firstly, it protects the accused against oppressive pre-trial imprisonment; secondly, it relieves the accused of the anxiety and public suspicion due to unresolved criminal charges and lastly, it protects against the risk that evidence will be lost or memories dimmed by the passage of time, thus, impairing the ability of the accused to defend him or herself. Stated another way, the purpose of both the criminal procedure rules governing speedy trials and the constitutional provisions, in particular, Article 21, is to relieve an accused of the anxiety associated with a suspended prosecution and provide reasonably prompt administration of justice.

19. The reasons for the delay is one of the factors which courts would normally assess in determining as to whether a particular accused has been deprived of his or her right to speedy trial, including the party to whom the delay is attributable. Delay, which occasioned by action or inaction of the prosecution is one of the main factors which will be taken note by the courts while interjecting a criminal trial. A deliberate attempt to delay the trial, in order to hamper the accused, is weighed heavily against the prosecution. However, unintentional and unavoidable delays or administrative factors over which prosecution has no control, such as, over-crowded court dockets, absence of the presiding officers, strike by the lawyers, delay by the superior forum in notifying the designated Judge, (in the present case only), the matter pending before the other forums, including High Courts and Supreme Courts and adjournment of the criminal trial at

the instance of the accused, may be a good cause for the failure to complete the trail within a reasonable time. This is only illustrative and not exhaustive. Such delay or delays cannot be violative of accused's right to a speedy trial and needs to be excluded while deciding whether there is unreasonable and unexplained delay. The good cause exception to the speedy trial requirement focuses on only one factor i.e. the reason for the delay and the attending circumstances bear on the inquiry only to the extent to the sufficiency of the reason itself.

Keeping this settled position in view, we have perused the note prepared by Shri Raval, learned ASG. Though, the note produced is not certified with copies of the order sheets maintained by the trial court, since they are not disputed by the other side, we have taken the information furnished therein as authentic. The note reveals that prosecution, apart from seeking 4-5 adjournments, right from 1991 till 2012, is not responsible for delay in any manner whatsoever. Therefore, in our opinion the delay in trial of the petitioners from 1991 to 2012 is solely attributable to petitioners and other accused persons.

20. Second limb of the argument of the learned Senior Counsel Shri Andhyarujina is that the of failure of completion of trial has not only caused great prejudice to the petitioners but also their family members. Presumptive prejudice is not an alone dispositive of speedy trial claim and must be balanced against other factors. The accused has the burden to make some showing of prejudice, although a showing of actual prejudice is not required. When the accused makes a prima-facie showing of prejudice, the burden shifts on the prosecution to show that the accused suffered no serious prejudice. The question of how great lapse it is, consistent with the guarantee of a speedy trial, will depend on the facts and circumstances of each case. There is no basis for holding that the right to speedy trial can be quantified into specified number of days, months or years. The mere passage of time is not sufficient to establish denial of a right to a speedy trial, but a lengthy delay, which is presumptively prejudicial, triggers the examination of other factors to determine whether the rights have been violated.

21. The length of the delay is not sufficient in itself to warrant a finding that the accused was deprived of the right to a speedy trial. Rather, it is only one of the factors to be considered, and must be weighed against other factors. Moreover, among factors to be considered in determining whether the right to speedy trial of the accused is violated, the length of delay is least conclusive. While there is authority that even very lengthy delays do not give rise to a per se conclusion of violation of constitutional rights, there is also authority that long enough delay could constitute per se violation of right to speedy trial. In our considered view, the delay tolerated varies with the complexity of the case, the manner of proof as well as gravity of the alleged crime. This, again, depends on case to case basis. There cannot be universal rule in this regard. It is a balancing process while determining as to whether the accused's right to speedy trial has been violated or not. The length of delay in and itself, is not a weighty factor.

22. In the present case, the delay is occasional by exceptional circumstances. It may not be due to failure of the prosecution or by the systemic failure but we can only say that there is a good cause for the failure to complete the trial and in our view, such delay is not violative of the right of the accused for speedy trial.

23. Prescribing a time limit for the trial court to terminate the proceedings or, at the end thereof, to acquit or discharge the accused in all cases will amount to legislation, which cannot be done by judicial directives within the arena of judicial law making power available to constitutional courts; however, liberally the courts may interpret Articles 21, 32, 141 and 142. (Ramchandra Rao P. v. State of Karnataka, (2002) 4 SCC 578). The Seven Judges Bench overruled four earlier decision of this Court on this point: Raj Deo (II) v. State of Bihar, (1999) 7 SCC 604, Raj Deo Sharma v. State of Bihar, (1998) 7 SCC 507; Common Cause, A Registered Society v. Union of India, (1996) 4 SCC 33. The time limit in these four cases was contrary to the observations of the Five Judges Bench in A.R. Antulay (Supra). The Seven Judges Bench in Ramchandra Rao P. v. State of Karnataka, (Supra) has been followed in State through CBI v. Dr. Narayan Waman Nerukar, (2002) 7 SCC 6 and State of Rajasthan v. Ikbal Hussen, (2004) 12 SCC 499. It was further observed that it is neither advisable, feasible nor judicially permissible to prescribe an outer limit for the conclusion of all criminal proceedings. It is for the criminal court to exercise powers under Sections 258, 309 and 311 of the Cr.P.C. to effectuate the right to a speedy trial. In an appropriate case, directions from the High Court under Section 482 Cr.P.C. and Article 226/227 can be invoked to seek appropriate relief.

24. In view of the settled position of law and particularly in the facts of the present case, we are not in agreement with the submissions made by learned Senior Counsel, Shri. T.R. Andhyarujina. Before we conclude, we intend to say, particularly, looking into long adjournments sought by the accused persons, who are seven in number, that accused cannot take advantage or the benefit of the right of speedy trial by causing the delay and then use that delay in order to assert their rights.

25. The learned Senior Counsel would tell us, please don't look who caused the delay in completing the trial but only look at whether there is delay in completion of the trial and if it is there, please put a big "full stop" for the trial. In our view, this submission of the learned Senior Counsel cannot be accepted by us, in view of the observations by this Court in P. Ramachandra's case (supra). Before parting with the case, we should certainly give credit to our judicial officers, who have painstakingly suffered with all the dilatory tactics adopted by the accused in dragging on with the proceedings for nearly thirty seven years. They are not to be blamed at all. In fact, they do deserve appreciation while conducting such trials where one of the accused is not only Bachelor of Laws but also Bachelor of Literature. We certainly say that our system has not failed, but, accused was successful in dragging on the proceedings to a stage where, if it is drawn further, it may snap the Justice Delivery System. We are also conscious of the fact that more than thirty Judges had tried this case at one stage or the other, but, all of them have taken care to see that the trial is completed at the earliest. They are not to be blamed and certainly the system has not to be blamed, but, positively, somebody has succeeded in his or in their attempt. The system has done its best, but, has not achieved the expected result and certainly, will not fit into the category of cases where (late) N.A. Palkhiwala, one of the most outstanding Senior Advocates in the Country had said that

"...... the law may or may not be an ass, but in India it is certainly a snail and our cases proceed at a pace which would be regarded as unduly slow in a community of snails". Therefore, we say, we will not buy this argument of the learned Senior Counsel that there is systemic failure. Therefore, in our view at this stage the one and the only direction that requires to be issued is to direct the learned trial judge to take up the case on day to day basis and conclude the proceedings as early as possible, without granting unnecessary and unwarranted adjournments.

26. Writ Petitions are, accordingly, dismissed with the aforesaid directions.

...................................J.

(H. L. DATTU)

...................................J.

(CHANDRAMAULI KR. PRASAD)

NEW DELHI;

AUGUST 17, 2012.

REPORTABL E

IN THE SUPREME COURT OF INDIA

CRIMINAL WRIT JURISDICTION

WRI T PETITIO N (CRIMINAL) NO. 20 0 OF 201 1

Ranjan Dwivedi … Petitioner(s)

Versus

C.B.I. through Director General … Respondent(s)

WITH

WRI T PETITIO N (CRIMINAL) NO. 20 5 OF 201 1

AC. Sudevananda Avadhuta … Petitioner(s)

Versus

C.B.I. through Director General … Respondent(s)

J U D G M E N T

CHANDRAMAUL I KR . PRASAD, J.

I agree.

However, I would like to add few words of my own. The Union Minister for Railways lost his life in a bomb explosion which took place at Samastipur Railway Station in the State of Bihar on 2nd of January, 1975.

Petitioners are facing trial in the said case. Their statements under Section 313 of the Code of Criminal Procedure have been recorded and the trial is at the stage of argument.

At this stage, petitioners have filed these writ petitions under Article 32 of the Constitution of India and their prayer is to quash the prosecution primarily on the ground of violation of their fundamental right of speedy trial guaranteed under Article 21 of the Constitution of India. Mr. T.R. Andhyarujina, Senior Advocate appears in support of the writ petitions. He submits that delay of 37 years in conclusion of the trial, for whatever reason, is atrocious and a civilized society cannot permit continuance of the trial for such a long period. He appeals to us to rise to the occasion and make history by holding that the system which allows trial for such a long period is barbaric, oppressive and atrocious and, therefore, in the teeth of right of speedy trial guaranteed under Article 21 of the Constitution. Systemic delay cannot be a defence to deny the right of speedy trial, emphasizes Mr. Andhyarujina.

I have given my most anxious consideration to the submission advanced and, at one point of time, in deference to his passionate appeal I was inclined to consider this issue in detail and give a fresh look but, having been confronted with the Five-Judge Constitution Bench decision in the case of Abdul Rehman Antulay v. R.S. Nayak, (1992) 1 SCC 225 and Seven-Judge Constitution Bench judgment of this Court in the case of P. Ramachandra Rao v. State of Karnataka, (2002) 4 SCC 578, this course does not seem to be open to me. Judicial discipline expects us to follow the ratio and prohibits laying down any principle in derogation of the ratio laid down by the earlier decisions of the Constitution Benches of this Court.

In the case of Abdul Rehman Antulay (supra) this Court in paragraph 86 (5) has observed as follows:

"While determining whether undue delay has occurred (resulting in violation of Right to Speedy Trial) one must have regard to all the attendant circumstances, including nature of offence, number of accused and witnesses, the workload of the court concerned, prevailing local conditions and so on — what is called, the systemic delays. It is true that it is the obligation of the State to ensure a speedy trial and State includes judiciary as well, but a realistic and practical approach should be adopted in such matters instead of a pedantic one."

The aforesaid decision came up for consideration before a Seven-Judge Constitution Bench of this Court in the case of P. Ramachandra Rao (supra) and while approving the ratio, the Court in Paragraph 29 (1) & (2) observed as follows:

"(1) The dictum in Abdul Rehman Antulay v. R.S. Nayak, (1992) 1 SCC 225 is correct and still

holds the field.

(2) The propositions emerging from Article 21 of the Constitution and expounding the right to speedy trial laid down as guidelines in Abdul Rehman Antulay v. R.S. Nayak, (1992) 1 SCC 225

adequately take care of right to speedy trial. We uphold and reaffirm the said propositions."

Hence, in my opinion, the trial cannot be terminated merely on the ground of delay without considering the reasons thereof.

My learned and noble brother has gone into the reasons for delay and I agree with him that the facts of the present case do not justify quashing of the prosecution.

………………………………………………………….J.

(CHANDRAMAULI KR PRASAD)

Expenditure on income not forming part of taxable income

Posted on 11 September 2012 by Apurba Ghosh

Court

INCOME TAX APPELLATE TRIBUNAL

Brief

Facts, in brief, as per relevant orders are that return declaring loss of ``5,51,91,000/- filed on 29.09.2008 by the assessee, carrying on the business of financing, leasing and investment activities, after being processed on 05.08.2009 u/s 143 (1) of the Income-tax Act, 1961, (hereinafter referred to as the Act), was selected for scrutiny with the service of a notice u/s 143(2) of the Act, issued on 06.08.2009 During the course of assessment proceedings, the Assessing Officer (A.O. in short) noticed that the assessee claimed dividend income of ``10,000/- exempt u/s 10(34) of the Act. In response to a show cause notice vide order sheet entry dated 2.8.2010 by the AO, asking as to why disallowance in terms of provisions u/s 14A of the Act r.w.r. 8D of the I.T. Rules, 1962 be not made, the assessee merely replied that no expenditure was incurred for earning dividend income. However, the assessee worked out disallowance of ``5,42,74,410/- in terms of provisions of section 14A of the Act, under protest. In the light of this reply of the assessee, the AO while relying upon decisions in CIT Vs. United General Trust, 200 ITR 488 (SC); Southern Petro Chemicals Industries (2005), 93 TTJ 161; Harish Krishnakanta Bhatt (2004), 91 ITD 311; S.G. Investments and Industries Ltd. (2004), 89 ITD 44 and Everplus Securities & Finance Ltd. (2006), 285 ITR (AT) 112 disallowed an amount of ``5,45,52,862/- in term of provisions of section 14A of the Act read with rule 8D of the I.T. Rules 1962 ,observing, inter alia, that issue is not only of the expenses incurred for receiving the dividend income but size of the investment and cost incurred on investment and management of huge investments for earning income which did not form part of total income, are also material.

Citation

Assistant. CIT, Circle 2(1),Room no. 398D,CR Building, IP Estate, New Delhi (Appellant) V/s. M/s Apollo Finance Ltd. ,414/1, DDA Commercial Complex, Distr ict Centre,Janakpur i,New Delhi [PAN: AAACA 5354J] (Respondent)

Judgement

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI 'A' BENCH

BEFORE SHRI HARI OM MARATHA, JM & SHRI A.N. PAHUJA,AM

ITA No.520/Del/2012

Assessment year: 2008-09

Assistant. CIT, Circle 2(1),

Room no. 398D,CR

Building, IP Estate, New

Delhi

(Appellant)

V/s.

M/s Apollo Finance Ltd. ,

414/1, DDA Commercial

Complex, Distr ict Centre,

Janakpur i,New Delhi

[PAN: AAACA 5354J]

(Respondent)

Assessee by: S/Shri Anoop Sharma & M.K. Gir i, ARs

Revenue by: Mrs. Geet Mala Mohananey,DR

Date of hearing 27-08-2012

Date of pronouncement 31-08-2012

O R D E R

A.N.Pahuja:-

This appeal filed on 02.02.2012 by the Revenue against an order dated 25th November, 2011 of the ld. CIT(A)-V, New Delhi, raises the following grounds:-

1. "The ld. CIT(A) has erred in reducing the disallowance made by the AO u/s 14A of the Income-tax Act to only ``10,000/-.

2. The appellant craves leave for reserving the right to amend, modify, alter, add, or forgo any grounds of appeal at any time before or during the hearing of this appeal."

2. Facts, in brief, as per relevant orders are that return declaring loss of ``5,51,91,000/- filed on 29.09.2008 by the assessee, carrying on the business of financing, leasing and investment activities, after being processed on 05.08.2009 u/s 143 (1) of the Income-tax Act, 1961, (hereinafter referred to as the Act), was selected for scrutiny with the service of a notice u/s 143(2) of the Act, issued on 06.08.2009 During the course of assessment proceedings, the Assessing Officer (A.O. in short) noticed that the assessee claimed dividend income of ``10,000/- exempt u/s 10(34) of the Act. In response to a show cause notice vide order sheet entry dated 2.8.2010 by the AO, asking as to why disallowance in terms of provisions u/s 14A of the Act r.w.r. 8D of the I.T. Rules, 1962 be not made, the assessee merely replied that no expenditure was incurred for earning dividend income. However, the assessee worked out disallowance of ``5,42,74,410/- in terms of provisions of section 14A of the Act, under protest. In the light of this reply of the assessee, the AO while relying upon decisions in CIT Vs. United General Trust, 200 ITR 488 (SC); Southern Petro Chemicals Industries (2005), 93 TTJ 161; Harish Krishnakanta Bhatt (2004), 91 ITD 311; S.G. Investments and Industries Ltd. (2004), 89 ITD 44 and Everplus Securities & Finance Ltd. (2006), 285 ITR (AT) 112 disallowed an amount of ``5,45,52,862/- in term of provisions of section 14A of the Act read with rule 8D of the I.T. Rules 1962 ,observing, inter alia, that issue is not only of the expenses incurred for receiving the dividend income but size of the investment and cost incurred on investment and management of huge investments for earning income which did not form part of total income, are also material.

3. On appeal, the ld. CIT(A) restricted the disallowance to ``10,000/- i.e to the extent of dividend income earned, in the following terms:-

"4.2 I have considered the assessment order, submissions of the appellant and various case laws relied on by the appellant as well as the Assessing Officer. The Mumbai High Court in the case of CIT Vs. Godrej and Boyce has ruled that rule 8D is applicable from assessment year 2008-09. The year under consideration in this case now is also 2008-09. In a recent decision, the ITAT Mumbai "B" bench in I.T.A. No.1050/Mum/2010 (for assessment year 2008-09) in the case of Multi Commodity Exchange of (India) Ltd. after consideration of the Hon'ble Bombay High Court in I.T.A. No.626 of 2010 in the case of Godrej & Boyce Mfg. Co. Ltd. Mumbai Vs. Dy. CIT, Range 10(2), Mumbai & Anr. 328 ITR 81 (Bom) has held that it is only when Assessing Officer is not satisfied with the claim of the assessee, he can have recourse to Rule 8D. This is the view of the jurisdictional ITAT in the latest case of Jindal Photo Ltd. Vs. DCIT in I.T.A. No.814(Del) 2011. In the case under consideration too, it is also seen that the AO has proceeded to apply Rule 8D without giving any finding with regard to the correctness of the claim of the appellant that there was no disallowable expenses. In fact, the Assessing Officer has inadvertently mentioned that he is satisfied with the claim of the assessee, however, from perusal of the order, it is seen that it is an inadvertent error. From the various judicial rulings, it is clear that the Assessing Officer cannot apply Rule 8D automatically but can do so only where he records satisfaction on an objective basis that the assessee is unable to establish the correctness of its claim. The Hon'ble ITAT Delhi Bench "D" in the case of DCIT Vs. Jindal Photo Ltd. for assessment year 2008-09 has also similarly held that without recording any findings about the assessee's claim being incorrect and without recording satisfaction about such incorrectness of claim, to invoke Rule 8D is incorrect. The recording of satisfaction in terms of mandate in sub-section (2) of Sec 14A is not merely a formality but the reasons recorded must justify the ground on which the claim made by the assessee is not accepted. In absence of any recording of such satisfaction by AO, the facts of the case and respectfully following the decision of the Hon'ble jurisdictional Tribunal the addition is sustained only to the extent of `10,000/- which is the amount of dividend received during the year."

4. The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A).The ld. DR while referring to authorization issued u/s 253(2) of the Act by the ld. CIT on 31st January, 2012 submitted that the assessee merely claimed that no expenditure has been incurred for earning dividend income while it did not file any working//computation to show that interest of ``7,46,14,000/- and the demat expenses of ``82,000/- debited to profit and loss account were incurred for the purpose other than making investments of ``74,99,18,000/-. In the absence of any such working/computation, the AO could not comment on the correctness of the bare/cryptic claim that no expenditure was incurred for earning dividend. The initial onus was on the assessee to show that no such expenditure had been incurred for earning exempt income. Moreover, the assessee did not furnish any cash flow statement or details, evidencing that the borrowed funds had indeed been utilized for purposes other than aforesaid huge investments. Accordingly, while referring to the decision dated 6th July, 2012 of the ITAT in I.T.A. nos.1934 and 1935/Del./2012 in ACIT vs. M/s Hindustan Syringes and Medical Devices Ltd.,the ld. DR vehemently argued that the ld. CIT(A) was not justified in restricting the disallowance to ``10,000/- without any basis even when the assessee did not furnish any details before the AO.

5. On the other hand, the ld. AR on behalf of the assessee supported the findings of the ld. CIT(A) while contending that in para 3.6 of the assessment order, the AO accepted their claim that no expenditure had been incurred for arning income which did not form part of total income. To a query by the Bench, the ld. AR did not reply as to why the amount of ``82,000/- which admittedly was directly related to income which did not form part of total income, had not been offered for disallowance suo motu nor replied as to whether huge investments outstanding as on 31.03.2008 to the extent of ``74,99,18,000/-were made out of borrowed funds or own funds and whether any cash flow statement was submitted before the AO or the ld. CIT(A). However, the ld. AR feebly argued that such details were never requisitioned nor these issues had been examined by the lower authorities.

6. We have heard for both the parties and gone through the facts of the case. Indisputably, the AO disallowed the aforesaid amount of `5,45,52,862/-, invoking provisions of section 14A(2) of the Act read with Rule 8D of I.T. Rules, 1962,without even analyzing the nature of the expenditure nor it appears that relevant details of expenditure and accounts or cash flow statement were placed before the AO or the ld. CIT(A). The assessee merely submitted that no expenditure had been incurred for earning dividend income even when huge investments were made to the extent of``74,99,18,000/- until 31.3.2008 and did not even offer for disallowance, an amount of `82,200/- which admittedly was incurred for earning income which did not form part of total income. There is nothing to suggest as to whether or not any cash flow statement or sources of the investment in the various funds by the assessee were placed before the AO or the ld. CIT(A) . Apparently, the assessee did not furnish any details of expenditure incurred for management and supervision of aforesaid huge investments even when the assessee itself stated that an expenditure of `82,000/- was incurred for earning income which did not form part of total

income. In any case, no material was placed before the AO in order to enable him to record his satisfaction while the ld.CIT(A) concluded that the AO was required to record his satisfaction on the claim of the assessee u/s 14A(2) of the Act, irrespective of the fact of filing of details or otherwise .There is no apparent basis nor there is any such provision, restricting the disallowance to dividend income received by the assessee during the year. Hon'ble Apex Court in Kantamani Venkata Narayana and Sons v. First Addl. ITO [1967] 63 ITR 638 and again in Malegaon Electricity Co. P. Ltd. v. CIT [1970] 78 ITR 466 (SC) observed that it is the duty of the assessee to bring to the notice of the Income tax Officer particular items in the books of account or portions of documents which are relevant. The law casts a duty on the assessee to disclose fully and truly all material facts necessary for his assessment for that year. Not even a whisper has been made before us as to whether or not relevant accounts were placed before the AO or the ld. CIT(A) in order to enable them to examine the claim of the assessee. The ld. CIT(A) merely referred to certain decisions in relation to the disallowance without even examining the relevant accounts or ascertaining the relevant facts and circumstances .

6.1. Hon'ble Bombay High Court in the case of Godrej & Boyce Manufacturing Company Ltd. (supra) while adjudicat ing a similar issue in the context of provisions of sec. 14A of the Act and Rule 8D of the IT Rules,1962 concluded that Rule 8D, inserted w.e. f 24.3.2008 cannot be regarded as retrospect ive because i t enacts an art if icial method of est imat ing expenditure relatable to tax-f ree income. I t applies only w.e. f AY 2008-09. For the assessment years where Rule 8D does not apply, the AO wil l have to determine the quantum of disallowable expenditure by a reasonable method having regard to all the facts and circumstances, the Hon'ble High Court

concluded.

6.2 Hon'ble Supreme Court in their decision dated 6.7.2010 in CIT v. Walfort Share & Stock Brokers (P. ) Ltd. ,326 ITR 1, inter alia, observed that for at tract ing sect ion 14A of the Act there has to be a proximate cause for disallowance, which is its relat ionship with the tax exempt income. The theory of apportionment of expenditure between taxable and non-taxable has, in principle, been now widened under section 14A, Hon'ble Apex Court concluded.

6.3 Hon'ble Punjab & Haryana High Court in thei r decision in CIT vs. Hero Cycles Ltd. ,323 ITR 518 have observed that disal lowance under sect ion 14A requi res f inding of incurr ing of expenditure and where it is found that for earning exempted income no expenditure has been incurred, disal lowance under sect ion 14A cannot stand.

6.4 In Cheminvest Ltd. v. Income-tax Officer,317ITR(AT)86,Special Bench held that when the expenditure is incurred in relation to income which does not form part of total income, it has to suffer the disallowance irrespective of the fact whether any income is earned by the assessee or not and the provisions of sec. 14A of the Act do not envisage any such exception.

6.5 Hon'ble jurisdictional High Court in a recent decision dated 18.11.2011 in Maxopp Investment Ltd. vs. CIT,[2011] 15 taxmann.com 390 (Delhi) held as under:

"41. Sub-section (2) of section 14A, as we have seen, stipulates that the Assessing Officer shall determine the amount of expenditure incurred in relation to income which does not form part of the total income "in accordance with such method as may be prescribed". Of course, this determination can only be undertaken if the Assessing Officer is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. This part of section 14A(2) which explicitly requires the fulfillment of a condition precedent is also implicit in section 14A(1) [as it now stands] as also in its initial avatar as section 14A. It is only the prescription with regard to the method of determining such expenditure which is new and which will operate prospectively. In other words, section 14A, even prior to the introduction of sub-sections (2) & (3) would require the assessing officer to first reject the claim of the assessee with regard to the extent of such expenditure and such rejection must be for disclosed cogent reasons. It is then that the question of determination of such expenditure by the assessing officer would arise. The requirement of adopting a specific method of determining such expenditure has been introduced by virtue of sub-section (2) of section 14A. Prior to that, the assessing officer was free to adopt any reasonable and acceptable method.

42. Thus, the fact that we have held that sub-sections (2) & (3) of section 14A and Rule 8D would operate prospectively (and, not retrospectively) does not mean that the assessing officer is not to satisfy himself with the correctness of the claim of the assessee with regard to such expenditure. If he is satisfied that the assessee has correctly reflected the amount of such expenditure, he has to do nothing further. On the other hand, if he is satisfied on an objective analysis and for cogent reasons that the amount of such expenditure as claimed by the assessee is not correct, he is required to determine the amount of such expenditure on the basis of a reasonable and acceptable method of apportionment. It would be appropriate to recall the words of the Supreme Court in Walfort (supra) to the following effect:-

"The theory of apportionment of expenditure between taxable and non-taxable has, in principle, been now widened under section 14A."

So, even for the pre-Rule 8D period, whenever the issue of section 14A arises before an Assessing Officer, he has, first of all, to ascertain the correctness of the claim of the assessee in respect of the expenditure incurred in relation to income which does not form part of the total income under the said Act. Even where the assessee claims that no expenditure has been incurred in relation to income which does not form part of total income, the assessing officer will have to verify the correctness of such claim. In case, the assessing officer is satisfied with the claim of the assessee with regard to the expenditure or no expenditure, as the case may be, the assessing officer is to accept the claim of the assessee insofar as the quantum of disallowance under section 14A is concerned. In such eventuality, the assessing officer cannot embark upon a determination of the amount of expenditure for the purposes of section 14A(1). In case, the assessing officer is not, on the basis of objective criteria and after giving the assessee a reasonable opportunity, satisfied with the correctness of the claim of the assessee, he shall have to reject the claim and state the reasons for doing so. Having done so, the assessing officer will have to determine the amount of expenditure incurred in relation to income which does not form part of the total income under the said Act. He is required to do so on the basis of a reasonable and acceptable method of apportionment."

6.6. Hon'ble Calcutta High Court in Dhanuka & Sons vs. CIT,12 Taxmann.Com 227(Cal.) held that

"After hearing the learned counsel appearing for the parties and after going through the materials on record and the decisions cited by Mr. Khaitan, we find that the Supreme Court in the cases of CIT v. Maharastra Sugar Mills Ltd. [1971] 82 ITR 452 and Rajasthan State Warehousing Corpn. v. CIT [2000] 242 ITR 450/109 Taxman 145 having held that where there is one indivisible business giving rise to taxable income as well as exempt income, the entire expenditure incurred in relation to that business would have to be allowed even if a part of the income earned from the business is exempt from tax, section 14A of the Act was enacted to overcome those judicial pronouncements. The object of section14A of the Act is to disallow the direct and indirect expenditure incurred in relation to income which does not form part of the total income.

8. In the case before us, there is no dispute that part of the income of the assessee from its business is from dividend which is exempt from tax whereas the assessee was unable to produce any material before the authorities below showing the source from which such shares were acquired. Mr. Khaitan strenuously contended before us that for the last few years before the relevant previous year, no new share has been acquired and thus, the loan that was taken and for which the interest is payable by the assessee was not for acquisition of those old shares and, therefore, the authorities below erred in law in giving benefit of proportionate deduction.

9. In our opinion, the mere fact that those shares were old ones and not acquired recently is immaterial. It is for the assessee to show the source of acquisition of those shares by production of materials that those were acquired from the funds available in the hands of the assessee at the relevant point of time without taking benefit of any loan. If those shares were purchased from the amount taken in loan, even for instance, five or ten years ago, it is for the assessee to show by the production of documentary evidence that such loaned amount had already been paid back and for the relevant assessment year, no interest is payable by the assessee for acquiring those old shares. In the absence of any such materials placed by the assessee, in our opinion, the authorities below rightly held that proportionate amount should be disallowed having regard to the total income and the income from the exempt source. In the absence of any material disclosing the source of acquisition of shares which is within the special knowledge of the assessee, the assessing authority took a most reasonable approach in assessment."

6.7 As already observed, in the instant case, the assessee denied incurring any expenditure for earning income, which did not form part of total income during the course of assessment proceedings even when huge investments were made by the assessee in securities . In terms of the aforesaid decision of the Hon'ble jurisdictional High Court in Maxopp Investment Ltd.(supra), even where the assessee claims that no expenditure has been incurred in relation to income which does not form part of total income, the AO is required to verify the correctness of such claim. In case, the AO is not, on the basis of objective criteria and after giving the assessee a reasonable opportunity, satisfied with the correctness of the claim of the assessee, he shall have to reject the claim and state the reasons for doing so. Having done so, the AO has to determine the amount of expenditure incurred in relation to income which does not form part of the total income under the said Act, Hon'ble High Court concluded. Following the view taken in this decision, Hon'ble jurisdictional High Court in CIT vs. Machino Plastic Ltd in their decision dated 28.2.2012 in ITA no. 92 of 2011, restored the matter to the file of the AO, being handicapped because of failure of the assessee to furnish relevant details and particulars .In the instant case also, the AO was handicapped, because of failure of the assessee to furnish relevant details/particulars and accounts while making the disallowance in terms of provisions of sec. 14A of the Act. There is nothing in the assessment order or impugned order as to whether the assessee placed the relevant details & accounts before the AO nor the ld. CIT(A) seems to have undertaken any exercise to ascertain the details of expenditure objectively in managing and supervising the aforesaid huge investments in various funds & securities. In view of the foregoing, we consider i t fair and appropriate to set aside the order of the ld. CIT(A) and restore the mat ter to the f ile of the AO for deciding the issue, af resh in accordance wi th law in the light of our aforesaid observations and various judicial pronouncements, including those referred to above, af ter allowing sufficient opportunity to the assessee Needless to say that whi le redeciding the issue, the AO shall pass a speaking order, giving reasons for his sat isfact ion or otherwise, as pointed out by the Hon'ble jurisdictional High Court in thei r decision in Maxopp Investment Ltd (supra). The assessee is also directed to furnish all the relevant detai ls of expenditure actually incur red in managing and supervising the aforesaid huge investments in funds & secur it ies along wi th relevant accounts and cash f low statement . With these observat ions, ground no 1 in the appeal is disposed of.

7. No additional ground having been raised before us in terms of residuary ground no.2 in the appeal, accordingly, this ground is dismissed.

8.. No other plea or argument was made before us.

9. In the result, appeal is allowed but for statistical purposes.

Order pronounced in open Court

Sd/- Sd/-

(HARI OM MARATHA) (A.N. PAHUJA)

(Judicial Member) (Accountant Member)

Copy of the Order forwarded to:-

1. Assessee

2. Assistant . CIT, Ci rcle 2(1),Room no. 398D,CR Building, IP Estate, New Delhi

3. CIT concerned.

4. CIT(A)-V, New Delhi

5. DR, ITAT,'A' Bench, New Delhi

6. Guard File.

By Order,

Deputy/Asstt.Registrar

ITAT, Delhi

Genuine gift cannot consider as unexplained cash credit and exemption under section 54 cannot be denied only on purchase of new house in joint name

Posted on 11 September 2012 by Apurba Ghosh

Court

INCOME TAX APPELLATE TRIBUNAL

Brief

Brief facts are: The assessee was an employee of Bill and Milinda Gates Foundation, USA ("BMGF" ), USA and was appointed to work with the liaison office of BMGF, New Delhi as Director in its India AIDS initiative program. Assessee could not file his return of income within time prescribed by sections 139(1)/139(4), however, after the lapse of time the relevant income was offered for tax by way of paying the challan & TDS. Further a letter was written to the AO indicating this fact and accompanying TDS certificate and payment of remainder of tax. On this basis, Assessing Officer initiated proceedings u/s 148, asking the assessee to file a return of income, which was duly filed. The Assessing Officer made the above two additions to the income of the assessee, which have been deleted by the CIT(A).

Citation

ACIT, Cir. 43(1), New Delhi. (Appellant) Vs. Shri Ashok Alexander, 26, Sultanpur Estate, Mandi Road, New Delhi-30.PAN: AAJPA5919M (Respondent)

Judgement

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH "A" New Delhi

BEFORE SHRI R.P. TOLANI AND SHRI T.S. KAPOOR

ITA No. 4063/Del/11

A.Yr. 2004-05

ACIT, Cir. 43(1),

New Delhi.

(Appellant)

Vs.

Shri Ashok Alexander,

26, Sultanpur Estate,

Mandi Road, New Delhi-30.

PAN: AAJPA5919M

(Respondent)

Appellant by: Mrs. Anusha Khurana Sr. DR

Respondent by: Shri Sanjiv Chaudhary CA

O R D E R

PER R.P. TOLANI, J.M::

This is Revenue's appeal against CIT(A)'s order dated 21-6-2011 relating to A.Yr. 2004-05. Following grounds are raised:

"On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in:

(i) The CIT(A) has erred on facts and in law in deleting the addition of Rs. 3,26,690/- made by the AO as income from undisclosed sources.

(ii) The CIT(A) has erred on facts and in law in deleting the addition of Rs. 29,20,228/- made by the Assessing Officer on account of long term capital gain by disallowing the exemption claimed by the assessee u/s 54 of the I.T. Act."

2. Brief facts are: The assessee was an employee of Bill and Milinda Gates Foundation, USA ("BMGF" ), USA and was appointed to work with the liaison office of BMGF, New Delhi as Director in its India AIDS initiative program. Assessee could not file his return of income within time prescribed by sections 139(1)/139(4), however, after the lapse of time the relevant income was offered for tax by way of paying the challan & TDS. Further a letter was written to the AO indicating this fact and accompanying TDS certificate and payment of remainder of tax. On this basis, Assessing Officer initiated proceedings u/s 148, asking the assessee to file a return of income, which was duly filed. The Assessing Officer made the above two additions to the income of the assessee, which have been deleted by the CIT(A).

3. During the course of appellate proceedings CIT(A) called for a remand report from the Assessing Officer which is also considered in his order. Facts about first ground are that assessee's wife and son received gifts from assessee's father-in-law. They were credited in a joint a/c of assessee and his wife. Assessing Officer , however, held it to be unexplained cash credits of the assessee u/s 68. CIT(A) observed that the bank a/c in question in which these gifts were credited, was actually a joint account held with the assessee' wife. The amounts were gifted by the assessee's father-in-law out of his own bank account. According to CIT(A) the addition could not be made in assessee's hands as:

(i) the gift was genuine, given by the assessee's father-in-law to his own daughter and grand son through banking channels.

(ii) The gifts being received by these two persons, they could not be added in assessee's hands as his unexplained cash credit.

4. Apropos second ground, brief facts are: The assessee was owner of the property standing in his name which was sold; qua capital gain exemption u/s 54f was claimed by the assessee as the sale proceeds of the property were utilized for purchasing another house in the name of assessee and his wife. Wife did not contribute any amount towards purchase. Thus new house was purchased by the assessee. The entire purchase amount was sourced by the assessee from the sale of house property. Rental income from the sold property was earlier offered in the hands of the assessee. Assessing Officer was of the view that exemption u/s 54 was allowable to assessee to the extent of one half of the purchase amount as one half belonged to wife. CIT(A) on the basis of evidence, remand report, facts and circumstances held that sec. 54 is applicable when the assessee has utilized the entire proceeds of its property in the purchase of a new house which is complied with. Reliance was placed on Hon'ble Madras High Court judgment in the case of CIT Vs. V. Natarajan 287 ITR 271 holding that even if the new house is purchased by the assessee in the name of his wife within a period of one year of receiving the sale proceeds, the exemption u/s 54 was eligible.

5. Aggrieved, revenue is before us on these grounds.

6. Ld. DR relied on the order of Assessing Officer.

7. Apropos first ground, ld. counsel for the assessee, relied on the order of CIT(A). Apropos second ground, ld. counsel, apart from relying on the above judgment in the case of V. Natarajan (supra), further relied on Hon'ble Delhi High Court judgment in the case of CIT Vs. Ravinder Kumar Arora 342 ITR 38 (Del.), observing as under:

"On the aforesaid facts, we are of the view that the conditions stipulated in Section 54F stand fulfilled. It would be treated as the property purchased by the assessee in his name and merely because he has included the name of his wife and the property purchased in the joint names would not make any difference. Such a conduct has to be, rather, encouraged which gives empowerment to women. There are various schemes floated by the Government itself permitting joint ownership with wife. If the view of the Assessing Officer (AO) or the contention of the Revenue is accepted, it would be a derogatory step."

8. We have heard rival contentions and gone through the relevant material available on record. We see no infirmity in the order of CIT(A), inasmuch as:

(i) The gifts in question have been received not by the assessee but by his wife and son, gifted by assessee's father-in-law, who is a close relative. The gifts are from bank a/c of donee. In view thereof, we are unable to hold that the gifts in question were unexplained cash credits of the assessee. In any case, the amounts are not received by the assessee but his wife and son. Therefore, the question of this addition in the hands of assessee does not arise.

(ii) Apropos second ground, respectfully following the Hon'ble Delhi High Court judgment in the case of Ravinder Kumar Arora (supra), which in turn follows Hon'ble Madras High Court judgment in the case of V. Natarajan (supra), and Hon'ble Andhra Pradesh High Court judgment in the case of Mir Gulam Ali Khan Vs. CIT 165 ITR 228, we uphold the order of CIT(A) on this issue also.

9. In the result, revenue's appeal stands dismissed.

Order pronounced in open court on 24-08-2012.

Sd/- Sd/-

(T.S. KAPOOR) (R.P. TOLANI)

ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated:24-08-2012.

Copy to:

1. Assessee

2. AO

3. CIT

4. CIT(A)

5. DR

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Chartered Accountant Finance

Tuesday, September 11, 2012

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