CASE NO.:
Appeal (civil) 2106 of 2001
Appeal (civil) 2107 of 2001
PETITIONER:
PALLAV SHETH
Vs.
RESPONDENT:
CUSTODIAN & ORS.
DATE OF JUDGMENT: 10/08/2001
BENCH:
Brijesh Kumar, Ruma Pal
JUDGMENT:
KIRPAL, J.
These appeals by special leave are against the judgment of the
Special Court constituted under the Special Court (Trial of Offences
Relating to Transactions in Securities) Act, 1992 (hereinafter referred
to as 'the Special Court Act') whereby the Appellant has been held to
have committed civil contempt as defined under Section 2(b) of the
Contempt of Courts Act, 1971 and sentenced to undergo simple
imprisonment for a period of one month and a fine of Rs.2,000/-.
M/s Fairgrowth Financial Services Limited was notified on
2nd July, 1992 under the provisions of the Special Court Act. As a
result thereof, all properties belonging to the said notified party stood
automatically attached.
The Custodian appointed under the Special Court Act filed
Misc. Application No. 193 of 1993 and sought a decree for Rs. 50
crores on behalf of the notified party against Pallav Sheth, the
Appellant herein. On 24th February, 1994 the Appellant submitted to
a Consent Decree for a sum of Rs.51.49 crores which was to be paid
in instalments. Rs. 2.00 crores were paid but thereafter the Appellant
defaulted in the payment of further instalments.
The Custodian then moved an Execution Application No. 343 of
1994 and the Special Court there upon required the Appellant to
disclose all his assets and at the same time by an interim order
restrained him from alienating, encumbering, selling off or parting
with possession or transferring in any manner whatsoever any of his
assets movable and immovable including the Bank accounts. On an
affidavit being filed by the Appellant declaring his assets, the Special
Court on 24th August, 1994 passed further interim order of attachment
of some of the assets mentioned therein.
On 11th November, 1997 the Income Tax Department conducted
raids on Pallav Sheth. The newspaper reports indicated detection of
assets belonging to Pallav Sheth by the Income Tax Department
whereupon the Special Court directed the Custodian to ascertain from
the Income Tax Department complete details of all the assets of Pallav
Sheth. In response to a letter written by the Custodian, the
Commissioner of Income Tax vide its letter of 5th May, 1998
informed that during the search operations, the Income Tax
Department detected that Pallav Sheth was the de facto owner of five
companies, namely, Anzug Plastics (P) Ltd., Magan Hotels (P)
Limited, Klar Chemicals (P) Limited, Malika Foods (P) Limited and
Jainam Securities (P) Limited. Pallav Sheth is further reported to
have admitted in the statements before the Income Tax Department by
him and his wife that several cash deposits amounting to Rs. 2.81
crores made in the bank accounts of the aforesaid five companies were
his undisclosed income. According to the Commissioner of Income
Tax, the assets of these five companies belong to Pallav Sheth and
these companies were to receive substantial amounts from other
companies/individuals.
It was also stated by the Income Tax Department that Pallav
Sheth had admitted that profits were earned from the activities of these
companies in buying and selling of shares and bogus transactions of
bill discountings were entered into to show loss, in order to offset the
profits, and these monies were actually returned by cash and found
their way into the bank accounts.
The Custodian then on 18th June, 1998 filed Misc. Application
No. 276 of 1998 before the Special Court with a prayer that Pallav
Sheth should be punished for committing contempt of the Special
Court's order dated 24th August, 1994 as despite the said order he had
set up benami companies and had transferred and/or alienated his
property including cash inter alia with a view to defeat the decree
passed against him. Though Pallav Sheth in his reply denied that the
said five companies were his benami companies the Special Court
directed issuance of the show cause notice to punish Pallav Sheth for
contempt. It appears that Pallav Sheth filed an affidavit on 23rd July,
1999 to the effect that various statements made by him before the
Income Tax Authorities were made without his understanding the full
implications since he had been under the influence of strong
medication. Affidavits were also filed by the aforesaid five companies
in support of the stand of Pallav Sheth. It may here be noticed that by
an order dated 29th October, 1999 the Special Court allowed
amendment of the Miscellaneous Application No. 276 of 1998
permitting substitution of reference to the order dated 24th August,
1994 with order dated 3rd August, 1994. Ultimately by an order dated
31st January, 2001 the Special Court passed an order holding Pallav
Sheth to be guilty of Contempt of Court and sentenced him to one
month's simple imprisonment and imposed a fine of Rs.2,000/-. By a
separate order dated 7th February, 2001, the Special Court dealt with
the contention that its action was not barred by limitation as
contemplated by Section 20 of the Contempt of Courts Act on the
ground that this was a case of continuing wrong.
Along with this appeal by Pallav Sheth the aforesaid five
companies also filed appeals. Mr. Venugopal appearing on behalf of
Pallav Sheth restricted his arguments only to the issue of limitation
under Section 20 of the Contempt of Courts Act, 1971 and he chose
not to make any submissions on the merits of the issue. In other
words, no arguments were addressed on the finding of the Special
Court in relation to the aforesaid five companies and to its conclusion
that Pallav Sheth had committed a Contempt of Court. As for the
appeals filed by the five companies, the same were dismissed as
withdrawn on 11th April, 2001. Therefore, the only question which
survives for consideration in this appeal is whether in view of the
provisions of Section 20 of the Contempt of Courts Act, 1971, the
Special Court was prohibited from taking any action as, according to
Mr. Venugopal, the Court had initiated proceedings of contempt after
the expiry of a period of one year from the date on which the
contempt was alleged to have been committed. It is the case of the
Appellant that contempt, if any, was committed more than one year
prior to the initiation of proceedings by the Special Court and Section
20 of the Contempt of Courts Act, 1971 prohibited the Court from
taking any action at a belated stage.
Section 11-A of the Special Court Act provides that the Special
Court shall have and exercise, the same jurisdiction powers and
authority in respect of contempt of itself as a High Court has and may
exercise for this purpose, the provisions of Contempt of Courts Act,
1971. It is clear from the said provision that the Special Court which
is established under Section 5 of the Special Court Act and has to
consist of one or more sitting Judges of the High Court has the same
power as the High Court in respect of contempt of itself. This power
could be exercised in addition to the exercise of power under the
provisions of Contempt of Courts Act, 1971. The implication of this
clearly is that just as the High Court, being a Court of Record, has the
power under Article 215 of the Constitution of India to punish for
contempt of itself similarly, the Special Court consisting of a Judge of
the High Court can also exercise that power available under Article
215.
On behalf of the Custodian, it was contended by Mr. Rustomjee
that the power under Article 215 of the Constitution cannot be curbed
or curtailed by Section 20 of the Contempt of Courts Act, 1971. He
submitted that the power of the High Court to commit for contempt of
itself contained in Article 215 of the Constitution cannot be abrogated,
stultified or restricted by any other statutory provision including the
Contempt of Courts Act, 1971. He contended that Section 20 can, at
best, be regarded as providing for a period of limitation but it still
cannot bind the High Court exercising inherent powers under Article
215 of the Constitution. In the alternative, it was submitted by Mr.
Rustomjee that even if Section 20 was applicable proceedings are
initiated by the filing of an application and the period of limitation will
begin to run from the date of knowledge in cases where the contempt
has been concealed by fraud or dishonest conduct of the contemner,
like in the present case.
The Contempt of Courts Act, 1926 was the first piece of
legislation which was enacted with a view to define and limit the
powers of certain Courts in punishing for Contempt. This Act was
enacted with a view to remove doubts about the powers of the High
Court to punish for contempt and the doubts whether the High Court
could punish for Contempt of Court subordinate to it were removed
by Section 2 of the said Act. The Contempt of Courts Act, 1952
repealed the 1926 Act and made two significant departures from it.
Firstly, the expression "High Court" was defined to include the Court
of Judicial Commissioner, which had been excluded from the purview
of the 1926 Act and, furthermore, the High Courts so defined were
conferred with the jurisdiction to inquire into or try a contempt of
itself or of any court subordinate to it, irrespective of whether the
contempt was committed within or outside the local limits of
jurisdiction and irrespective of whether the person alleged to be guilty
of the contempt was within or outside such jurisdiction. Punishment
for Contempt of Court was provided by Section 4, being that of
simple imprisonment for a term which may extend to six months, or
with a fine which may extend to Rs.2,000/-, or with both.
On 1st April, 1960 a Bill was introduced in the Lok Sabha to
consolidate and amend the law relating to contempt of courts. A
Committee under the Chairmanship of Mr. H.N.Sanyal, Additional
Solicitor-General, was set up and it was required inter alia to examine
the law relating to contempt of courts and to suggest amendments
therein. On the submissions of the Sanyal Committee's report the Bill
was referred to a Joint Committee of the Houses of Parliament. The
said Joint Committee submitted its report to the Rajya Sabha on
23rd February, 1970 suggesting a few changes in the Bill which had
been introduced. One of the changes suggested by the Committee was
the insertion of Clause 20, which was new and corresponds to the
present Section 20 of the Contempt of Courts Act, 1971. The Joint
Committee Report in respect of this Clause 20 opined as follows:
"The Committee are of the opinion that contempt procedures by
their very nature should be initiated and dealt with as early as
possible. It was brought to the notice of the Committee that in
some cases contempt proceedings had been initiated long after the
alleged contempt had taken place. The Committee therefore
consider it necessary and desirable that a period of limitation
should be specified in respect of actions for contempt and have
accordingly laid down in the new clause a period of one year at
the expiration of which no proceedings for contempt should be
initiated."
The Sanyal Committee's recommendation, which had formed
the basis of the Contempt of Courts Bill that was referred to the Joint
Select Committee, had not contained any provision of limitation in
relation to taking any action for the contempt of courts, but after the
report of the Joint Select Committee a new Clause was added which
resulted in the incorporation of Section 20.
The Contempt of Courts Act, 1971 was enacted, as per the
Preamble, with a view "to define and limit the powers of certain
Courts in punishing Contempts of Courts and to regulate their
procedure in relation thereto". It provides for action being taken in
relation to civil as well as criminal contempt. It is not necessary, for
the purpose of this case, to analyse various Sections of the Act in any
great detail except to notice that Sections 3 to 7 of the Contempt of
Courts Act, 1971 provides for what is not to be regarded as
contempt. Section 8 specifies that nothing contained in the Act shall
be construed as implying that any other valid defence in any
proceedings for Contempt of Court ceases to be available merely by
reason of the provisions of the 1971 Act. Section 9 makes it clear that
the Act will not to be implied as enlarging the scope of contempt.
Section 10 contains the power of the High Court to punish contempts
of subordinate Courts, while Section 12 specifies the punishment
which can be imposed for Contempt of Court and other related
matters. Procedure to be followed where contempt is in the face of
the Supreme Court or a High Court is provided in Section 14, while
cognizance of criminal contempt in other cases is dealt with by Section
15. Section 15 has to be read with Section 17 which provides for
procedure after cognizance has been taken under Section 15. A
decision of the High Court to punish for contempt is made appealable
under Section 19 of the Act.
Sections 20 and 22, with which we are concerned in the present
case, read as follows:
"20. Limitation for actions for contempt.- No court shall
initiate any proceedings for contempt, either on its own motion or
otherwise, after the expiry of a period of one year from the date
on which the contempt is alleged to have been committed.
22. Act to be in addition to, and not in derogation of, other
laws relating to contempt.- The provisions of this Act shall be in
addition to, and not in derogation of, the provisions of any other
law relating to contempt of courts."
Learned counsel for the parties have drawn our attention to
various decisions of this Court in support of their respective
contentions. While the effort of both Mr. Venugopal and Mr. Bobde
on behalf of the Appellant was that even in exercise of the power
under Article 215 of the Constitution the provisions of Section 20 of
the Contempt of Courts Act, 1971 prohibited any action being taken
for contempt if a period of one year had elapsed, as was contended in
the present case, Mr. Rustomjee submitted that the constitutional
power contained under Article 215 could not in any way be stultified
or curtailed by any Act of Parliament including Section 20 of the 1971
Act.
It will be appropriate to refer to some of the decisions which
have a bearing on the point in issue in the present case.
In Sukhdev Singh Sodhi vs. The Chief Justice and Judges of
the Pepsu High Court this Court was concerned with the issue
whether this Court could transfer contempt proceedings from Pepsu
High Court to any other High Court. For transfer reliance had been
placed on Section 527 of the Criminal Procedure Code. While
holding that Section 527 did not apply in case where a High Court has
initiated proceedings for contempt of itself, it was held that even the
Contempt of Courts Act, 1952 recognised the existence of a right to
punish for contempt in every High Court and this right is vested in it
in the High Court by the Constitution. This Court referred to Article
215 of the Constitution and observed that so far as contempt of a High
Court itself is concerned, the Constitution vests this right in every
High Court and no Act of a legislature could take away that
jurisdiction and confer it afresh by virtue of its own authority. It,
accordingly, came to the conclusion that the Code of Criminal
Procedure did not apply in matters of contempt triable by the High
Court which could deal with it summarily and adopt its own procedure
which had to be fair and that the contemner was to be made aware of
the charge against him and given a fair and reasonable opportunity to
defend himself. Reliance was placed by Mr. Venugopal on a
decision in Baradakanta Mishra vs. Mr. Justice Gatikrushna
Misra, Chief Justice of the Orissa High Court and it was contended
that it was held in this case that Section 20 of the Contempt of Courts
Act, 1971 provided a period of limitation by saying that no Court shall
initiate any proceeding for contempt either on its own motion or
otherwise, after the expiry of a period of one year from the date on
which the contempt is alleged to have been committed. In
Baradakanta Mishra's case (supra) the Appellant had filed an
application before the High Court for initiating contempt proceedings
against the Chief Justice and other Judges in their personal capacity.
A Full Bench of three Judges were of the opinion that no Contempt of
Court had been committed and the application was rejected. The
Appellant then purported to avail the right of appeal under Section
19(1) of the Act and filed an appeal in this Court. A preliminary
objection was taken by the State against the maintainability of the
appeal on the ground that where the High Court had not initiated
proceedings and had refused to take action, no appeal as of right
would lie under Section 19(1) . This was the only issue which arose
for consideration of this Court in Baradakanta Mishra's case and this
Court upheld the preliminary objection and held that no appeal under
Section 19(1) was maintainable. It is no doubt true that during the
course of discussion reference was made to Sections 15, 17 and 20 of
the Contempt of Courts Act, 1971 but this Court was in that case not
called upon to consider the effect of the provisions of the Contempt of
Courts Act vis-à-vis inherent powers of the High Court to punish for
contempt. No reference is made in the judgment to Article 129 or
Article 215 of the Constitution. Furthermore interpretation of Section
20 was not an issue and no question of limitation arose therein.
Under the circumstances, we hold that the observations made by this
Court with reference to Section 20 were in the nature of obiter dicta
and not binding on this Court in the present case. In any case,
Baradakanta Mishra's case decision does not specifically deal with the
question as to when or how proceedings for contempt are initiated for
the purposes of Section 20 and nor has it considered the applicability
of the provisions of the Limitation Act, to which we shall presently
refer.
In Firm Ganpat Ram Rajkumar vs. Kalu Ram & Ors.
where an Order of this Court ordering delivering of premises had not
been complied with, an application was filed for initiation of contempt
proceedings. A contention was raised on behalf of the alleged
contemner based on Section 20 of the Contempt of Courts Act, 1971.
Dealing with this contention, this Court observed as follows:
"Another point was taken about limitation of this application
under section 20 of the Act. S.20 states that no court shall
initiate any proceedings for contempt, either on its own motion or
otherwise, after the expiry of a period of one year from the date
on which the contempt is alleged to have been committed. In this
case, the present application was filed on or about 3rd November,
1988 as appears from the affidavit in support of the application.
The contempt considered, inter alia, of the act of not giving the
possession by force of the order of the learned Sr. Sub-Judge,
Narnaul dated 12th February, 1988. Therefore, the application
was well within the period of one year. Failure to give
possession, if it amounts to a contempt in a situation of this
nature is a continuing wrong. There was no scope for application
of s. 20 of the Act."
The abovementioned observations indicate that the contention
based on Section 20 was not accepted for two reasons firstly that the
application for initiating action for contempt was filed within one year
of the date when the contempt was alleged to have been committed
and secondly failure to give possession amounted to continuing wrong
and, therefore, there was no scope for application of Section 20 of the
Act. This case is important for the reason that the Court regarded the
filing of the application for initiating contempt proceedings as the
relevant date from the point of view of limitation.
The power of this Court and the High Court under the
Constitution for taking action for contempt of subordinate court came
up for consideration in Delhi Judicial Service Association, Tis
Hazari Court, Delhi vs. State of Gujarat and Others etc. .
It referred to Sukhdev Singh Sodhi's case (supra) and held that even
after codification of the law of contempt in India the High
Courts
jurisdiction as the Court of Record to initiate proceedings and take
seisin of the matter remained unaffected by the Contempt of Courts
Act. It also referred to R.L.Kapur vs. State of Madras and by
following the said decision observed as follows:
"... The Court further held that in view of Article 215 of the
Constitution, no law made by a legislature could take away the
jurisdiction conferred on the High Court nor it could confer it
afresh by virtue of its own authority".
Referring to the Contempt of Courts Act, 1971 it observed with
relation of the powers of the High Court as follows:
"...Inherent powers of a superior Court of Record have remained
unaffected even after codification of Contempt Law. The
Contempt of Courts Act, 1971 was enacted to define and limit the
powers of courts in punishing contempts of courts and to regulate
their procedure in relation thereto. Section 2 of the Act defines
contempt of court including criminal contempt. Sections 5,6,7,8
and 9 specify matters which do not amount to contempt and the
defence which may be taken. Section 10 relates to the power of
High Court to punish for contempt of subordinate courts. Section
10 like Section 2 of 1926 Act and Section 3 of 1952 Act reiterates
and reaffirms the jurisdiction and power of a High Court in
respect of its own contempt and of subordinate courts. The Act
does not confer any new jurisdiction instead it reaffirms the High
Court's power and jurisdiction for taking action for the contempt
of itself as well as of its subordinate courts...."
The view in Delhi Judicial Service Association's case (supra)
was reiterated and reaffirmed in the case of In re: Vinay Chandra
Mishra and it was held that the amplitude and power of this Court to
punish for contempt could not be curtailed by the law made by the
Parliament or State Legislature. As observed in Income Tax
Appellate Tribunal through President vs. V.K. Agarwal and
Another at page 25 that the judgment in Vinay Chandra Mishra's
case was partially set aside in Supreme Court Bar Association. vs.
Union of India and Another on the question of power to suspend an
advocate's licence under contempt jurisdiction, the observation in
Vinay Chandra Mishra's case with regard to amplitude of the courts
power under Article 129 not being curtailed by a law made by the
Central or a State Legislature remained unaffected. It was in exercise
of the powers under Article 129 that this Court held the respondent in
V.K. Agarwal's case (supra) guilty of Contempt of Court as he had
tried to influence or question the decision making process of the
Income Tax Appellate Tribunal.
The applicability of the Limitation Act to Contempt of Courts
Act, 1971 came up for consideration in State of West Bengal and
Others vs. Kartick Chandra Das and Others . In that case against a
notice of contempt which had been issued by the Single Judge a
Letters Patent Appeal were filed under Section 19 of the Contempt of
Courts Act which was dismissed on the ground that the delay was not
condonable as Section 5 of the Limitation Act did not apply. While
reversing this decision of the Calcutta High Court, this Court
observed at page 344 as follows:
"7. In consequence, by operation of Section 29(2) read with
Section 3 of the Limitation Act, limitation stands prescribed as a
special law under Section 19 of the Contempt of Courts Act and
limitation in filing Letters Patent appeal stands attracted. In
consequence, Sections 4 to 24 of the Limitation Act stands
attracted to Letters Patent appeal insofar as and to the extent to
which they are not expressly excluded either by special or local
law. Since the rules made on the appellate side, either for
entertaining the appeals under clause 15 of the Letters Patent or
appeals arising under the contempt of courts, had not expressly
excluded, Section 5 of the Limitation Act becomes applicable.
We hold that Section 5 of the Limitation Act does apply to the
appeals filed against the order of the learned Single Judge for the
enforcement by way of a contempt. The High Court, therefore,
was not right in holding that Section 5 of the Limitation Act does
not apply. The delay stands condoned. Since the High Court had
not dealt with the matter on merits, we decline to express any
opinion on merits. The case stands remitted to the Division
Bench for decision on merits."
A Constitution Bench in the case of Supreme Court Bar
Association's case (supra) while considering this Court's power to
punish for contempt at page 421 observed as follows:
"21. It is, thus, seen that the power of this Court in respect of
investigation or punishment of any contempt including contempt
of itself, is expressly made "subject to the provisions of any law
made in this behalf by Parliament" by Article 142(2). However,
the power to punish for contempt being inherent in a court of
record, it follows that no act of Parliament can take away that
inherent jurisdiction of the court of record to punish for contempt
and Parliament's power of legislation on the subject cannot,
therefore, be so exercised as to stultify the status and dignity of
the Supreme Court and/or the High Courts, though such a
legislation may serve as a guide for the determination of the
nature of punishment which this Court may impose in the case of
established contempt. Parliament has not enacted any law dealing
with the powers of the Supreme Court with regard to
investigation and punishment of contempt of itself, (we shall refer
to Section 15 of the Contempt of Courts Act, 1971, later on) and
this Court, therefore, exercises the power to investigate and
punish for contempt of itself by virtue of the powers vested in it
under Articles 129 and 142(2) of the Constitution of India. "
"24. Thus, under the existing legislation dealing with contempt of
court, the High Courts and Chief Courts were vested with the
power to try a person for committing contempt of court and to
punish him for established contempt. The legislation itself
prescribed the nature and type, as well as the extent of,
punishment which could be imposed on a contemner by the High
Courts or the Chief Courts. The second proviso to Section 4 of
the 1952 Act (supra) expressly restricted the powers of the courts
not to "impose any sentence in excess of what is specified in the
section" for any contempt either of itself or of a court
subordinate to it."
Referring to the powers of the High Court under Article 215 to
impose punishment with reference to Contempt of Courts Act, 1971 at
page 428, the Court held as follows:
"37. The nature and types of punishment which a court of record
can impose in a case of established contempt under the common
law have now been specifically incorporated in the Contempt of
Courts Act, 1971 insofar as the High Courts are concerned and
therefore to the extent the Contempt of Courts Act, 1971
identifies the nature or types of punishments which can be
awarded in the case of established contempt, it does not impinge
upon the inherent powers of the High Court under Article 215
either. No new type of punishment can be created or assumed."
In Dr L.P. Misra vs. State of U.P. a contention was raised
that while exercising powers under Article 215 in punishing the
Appellant therein for Contempt of the High Court the procedure
contemplated by Section 14 of the Contempt of Courts Act, 1971 had
not been followed. This Court, dealing with this contention, observed
as follows:
"12. After hearing learned counsel for the parties and after going
through the materials placed on record, we are of the opinion that
the Court while passing the impugned order had not followed the
procedure prescribed by law. It is true that the High Court can
invoke powers and jurisdiction vested in it under Article 215 of
the Constitution of India but such a jurisdiction has to be
exercised in accordance with the procedure prescribed by law. It
is in these circumstances the impugned order cannot be
sustained."
In the case of Om Prakash Jaiswal vs. D.K.Mittal and
Another a Division Bench of this Court was called upon to interpret
Section 20 of the Contempt of Courts Act, 1971. In that case an
undertaking had been given before the High Court on 19th December,
1986 that the Municipal Corporation would not demolish or disturb a
construction till disposal of the writ petition. Despite this
undertaking, demolition took place on 11th January, 1987. Soon
thereafter the Appellant filed an application before the High Court
seeking the initiation of proceedings under Section 12 of the Contempt
of Courts Act, 1971. On 15th January, 1987 the High Court issued a
show-cause notice to the opposite party as to why contempt
proceedings should not be initiated against him for defiance of the
Court's order dated 19th December, 1986. On 6th January, 1988, on a
concession being made by the Advocate-General the High Court
ordered that notices be issued to show-cause why the opposite party be
not punished for disobeying the order dated 19th December, 1986.
Subsequently, on 23rd November, 1989 the High
Court came to the conclusion that issuing of a show-cause notice did
not amount to initiation of proceedings and, therefore, the bar enacted
by Section 20 of the Act was attracted and the application was
liable to be rejected.
This Court had to consider whether the order of 6th January, 1988
amounted to initiation of proceedings for contempt. Dealing with the
question of initiation of proceedings the relevant observations of the
judgment are as follows:
"14. In order to appreciate the exact connotation of the
expression "initiate any proceedings for contempt" we may
notice several situations or stages which may arise before the
court dealing with contempt proceedings. These are:
(i) (a) a private party may file or present an application or petition
for initiating any proceedings for civil contempt;
or
(b) the court may receive a motion or reference from the
Advocate General or with his consent in writing from any other
person or a specified law officer or a court subordinate to the
High Court;
(ii) (a) the court may in routine issue notice to the person sought
to be proceeded against;
or
(b) the court may issue notice to the respondent calling upon him
to show cause why the proceedings for contempt be not initiated;
(iii) the court may issue notice to the person sought to be
proceeded against calling upon him to show cause why he be not
punished for contempt.
15. In the cases contemplated by (i) or (ii) above, it cannot be
said that any proceedings for contempt have been initiated. Filing
of an application or petition for initiating proceedings for
contempt or a mere receipt of such reference by the court does
not amount to initiation of the proceedings by court. On
receiving any such document, it is usual with the courts to
commence some proceedings by employing an expression such as
"admit", "rule", "issue notice" or "issue notice to show cause
why proceedings for contempt be not initiated". In all such cases
the notice is issued either in routine or because the court has not
yet felt satisfied that a case for initiating any proceedings for
contempt has been made out and therefore the court calls upon
the opposite party to admit or deny the allegations made or to
collect more facts so as to satisfy itself if a case for initiating
proceedings for contempt was made out. Such a notice is
certainly anterior to initiation. The tenor of the notice is itself
suggestive of the fact that in spite of having applied its mind to
the allegations and the material placed before it the court was not
satisfied of the need for initiating proceedings for contempt; it
was still desirous of ascertaining facts or collecting further
material whereon to formulate such opinion. It is only when the
court has formed an opinion that a prima facie case for initiating
proceedings for contempt is made out and that the respondents or
the alleged contemners should be called upon to show cause why
they should not be punished; then the court can be said to have
initiated proceedings for contempt. It is the result of a conscious
application of the mind of the court to the facts and the material
before it. Such initiation of proceedings for contempt based on
application of mind by the court to the facts of the case and the
material before it must take place within a period of one year
from the date on which the contempt is alleged to have been
committed failing which the jurisdiction to initiate any
proceedings for contempt is lost. The heading of Section 20 is
"limitation for actions for contempt". Strictly speaking, this
section does not provide limitation in the sense in which the term
is understood in the Limitation Act. Section 5 of the Limitation
Act also does not, therefore, apply. Section 20 strikes at the
jurisdiction of the court to initiate any proceedings for contempt."
It was contended by Mr. Venugopal that Section 20 was
mandatory and it imposes a prohibition on the Court in taking action
once a period of one year had elapsed. He submitted that Section 20
of the Act nowhere mentions the filing of an application for initiating
proceedings of contempt and, therefore, the provisions of Section
29(2) of the Limitation Act would have no application. Relying upon
Baradakanta Mishra's case, he submitted that an action of contempt
was between the Court and the alleged contemner and hence the date
of filing of the petition was not relevant. He submitted that the
judgment in Om Prakash Jaiswal's case (supra) had not been correctly
decided to the extent that the judgment held that mere issuance of a
show-cause notice was not the initiation of contempt proceedings by
the Court. He, however, submitted that contempt proceedings are
initiated within the meaning of Section 20 when the Court, on the
application of mind, issued even a show-cause notice within a period
of one year of the committal of alleged contempt.
There can be no doubt that both this Court and High Courts are
Courts of Record and the Constitution has given them the powers to
punish for contempt. The decisions of this Court clearly show that
this power cannot be abrogated or stultified. But if the power under
Article 129 and Article 215 is absolute can there be any legislation
indicating the manner and to the extent that the power can be
exercised? If there is any provision of the law which stultifies or
abrogates the power under Article 129 and/or Article 215 there can be
little doubt that such law would not be regarded as having been validly
enacted. It, however, appears to us that providing for the quantum of
punishment or what may or may not be regarded as acts of contempt
or even providing for a period of limitation for initiating proceedings
for contempt cannot be taken to be a provision which abrogates or
stultifies the contempt jurisdiction under Article 129 or Article 215 of
the Constitution.
This Court has always frowned upon the grant or existence of
absolute or unbridled power. Just as power or jurisdiction under
Article 226 has to be exercised in accordance with law, if any,
enacted by the legislature it would stand to reason that the power
under Article 129 and/or Article 215 should be exercised in
consonance with the provisions of a validly enacted law. In case of
apparent or likelihood of conflict the provisions should be construed
harmoniously.
The Contempt of Courts Act, 1971 inter alia provides for what
is not to be regarded as contempt; it specifies in Section 12 the
maximum punishment which can be imposed; procedure to be
followed where contempt is in the face of the Supreme Court or in the
High Court or cognizance of criminal contempt in other cases is
provided by Sections 14 and 15; the procedure to be followed after
taking cognizance is provided by Section 17; Section 18 provides that
in every case of criminal contempt under Section 15 the same shall be
heard and determined by a Bench of not less than two Judges; Section
19 gives the right of appeal from any order or decision of High Court
in the exercise of its jurisdiction to punish for contempt. There is no
challenge to the validity of any of the provisions of the Contempt of
Courts Act as being violative or in conflict with any provisions of the
Constitution. Barring observations of this Court in the Supreme Court
Bar Association's case (supra), where it did not express any opinion
on the question whether maximum punishment fixed by the 1971 Act
was binding on the Court, no doubt has been expressed about the
validity of any provision of the 1971 Act. In exercise of its
constitutional power this Court has, on the other hand, applied the
provisions of the Act while exercising jurisdiction under Article 129
or 125 of the Constitution. In Sukhdev Singh Sodhi's case (supra) it
recognised that the 1926 Act placed a limitation on the amount of
punishment which could be imposed. Baradakanta Mishra's case was
decided on the interpretation of Section 19 of the 1971 Act, namely,
there was no right of appeal if the Court did not take action or initiate
contempt proceedings. In the case of Firm Ganpat Ram Rajkumar's
case (supra) the Court did not hold that Section 20 of the 1971 Act
was inapplicable. It came to the conclusion that the application for
initiating contempt proceedings (was within time and limitation had to
be calculated) as for the purpose of limitation date of filing was
relevant and furthermore that was a case of continuing wrong. In
Kartick Chandra Das case (supra) the provisions of the Limitation Act
were held to be applicable in dealing with application under Section 5
in connection with an appeal filed under Section 19 of the Limitation
Act. A three-Judge Bench in Dr L.P.Misra's case (supra) observed
that the procedure provided by the Contempt of Courts Act, 1971 had
to be followed even in exercise of the jurisdiction under Article 215 of
the Constitution. It would, therefore, follow that if Section 20 is so
interpreted that it does not stultify the powers under Article 129 or
Article 215 then, like other provisions of the Contempt of Courts Act
relating to the extent of punishment which can be imposed, a
reasonable period of limitation can also be provided.
The question which squarely arises is as to what is the meaning
to be given to the expression "no court shall initiate any proceedings
for contempt..." occurring in Section 20 of the 1971 Act. Section 20
deals not only with criminal contempt but also with civil contempt. It
applies not only to the contempt committed in the face of the High
Court or the Supreme Court but would also be applicable in the case
of contempt of the subordinate court. The procedure which is to be
followed in each of these cases is different.
As we have already noted, in the Bill which was presented to
the Parliament after taking into consideration the recommendations of
the Sanyal Committee there was no provision similar to Section 20 of
the 1971 Act. It is only the Joint Parliamentary Committee which
recommended the insertion of Clause 20 so as to provide for a period
of limitation. There can be little doubt that Section 20, as framed, is
not happily worded. The heading of the section, however, indicates
what it was to provide for "Limitation for actions for contempt". The
wording of the section are negative but it is clear that terminus ad
quem is the initiation of proceedings for contempt. The question that
arise as to how or when are the proceedings for contempt initiated.
In Webster's Third New International Dictionary the word
"initiate" has inter alia been defined thus:
"to begin or set going: make a beginning of: perform or facilitate
the first actions, steps, or stages of"
In Shorter Oxford English Dictionary the word "initiate" is
defined as:
"to begin, commence, enter upon, to introduce, set going,
originates"
Under Section 23 of the Contempt of Courts Act, 1971 power
has been given to this Court and to the High Courts to make rules not
inconsistent with the provisions of the Act providing for any matter
relating to its procedure. Our attention has been drawn to Rules
framed under Section 23 by this Court as well as by the High Courts
in India. All these Rules inter alia require, other than suo motu
action is taken, petition or application being filed in Court it is then
taken up for consideration. For example, relevant part of Rule 2 of
the Calcutta High Court Contempt of Courts Rules, 1975 reads as
follows:
"Rule 2. (1) Proceedings in connection with a Civil Contempt
may be initiated-
(a) by a petition presented by a party or parties aggrieved; or
(b) by the High Court on its own motion; or
(c) on a reference made to the High Court by the subordinate
courts as in the case of "Criminal Contempt".
(2) Proceedings in connection with a criminal contempt may be
initiated-
(a) on a motion of the High Court in respect of a contempt
committed upon its own view under section 14 of the Act; or
(b) on its own motion by the High Court under section 15(1) of
the Act; or
(c) on a motion founded on a petition presented by the
Advocate-General under section 15(1)(a) of the Act; or
(d) on a motion founded on a petition presented by any other
person with the consent in writing of the Advocate-General
under section 15(1)(b) of the Act; or
(e) on a reference made to the High Court by the subordinate
courts under section 15(2) of the Act, containing the
following particulars:
(a) a brief statement of the case;
(b) the particulars of the contumacious acts;
(c) name, address and other particulars of the respondents
along with the copies of the papers relating to
contumacious acts."
The Rules so framed by all the Courts in India do show that
proceedings are initiated inter alia with the filing of an application or
a petition in that behalf. If, however, proceedings are not initiated by
filing of an application within a period of one year from the date on
which the contempt is alleged to have been committed then the Court
shall not have jurisdiction to punish for contempt. If, on the other
hand, proceedings are properly initiated by the filing of an
application, in the case of civil contempt like the present before the
Court within the period of limitation then the provisions of Section 20
will not stand in the way of the Court exercising its jurisdiction.
In the case of criminal contempt of subordinate court, the High
Court may take action on a reference made to it by the subordinate
court or on a motion made by the Advocate-General or the Law
Officer of the Central Government in the case of Union Territory.
This reference or motion can conceivably commence on an application
being filed by a person whereupon the subordinate court or the
Advocate-General if it is so satisfied may refer the matter to the High
Court. Proceedings for civil contempt normally commence with a
person aggrieved bringing to the notice of the Court the wilful
disobedience of any judgment, decree, order etc. which could amount
to the commission of the offence. The attention of the Court is drawn
to such a contempt being committed only by a person filing an
application in that behalf. In other words, unless a Court was to take
a suo motu action, the proceeding under the Contempt of Courts Act,
1971 would normally commence with the filing of an application
drawing to the attention of the Court to the contempt having been
committed. When the judicial procedure requires an application being
filed either before the Court or consent being sought by a person from
the Advocate-General or a Law Officer it must logically follow that
proceeding for contempt are initiated when the applications are made.
In other words, the beginning of the action prescribed for taking
cognizance of criminal contempt under Section 15 would be initiating
the proceedings for contempt and the subsequent action taken thereon
of refusal or issuance of a notice or punishment thereafter are only
steps following or succeeding to such initiation. Similarly, in the case
of a civil contempt filing of an application drawing the attention of the
Court is necessary for further steps to be taken under the Contempt of
Courts Act, 1971.
One of the principles underlying the law of limitation is that a
litigant must act diligently and not sleep over its rights. In this
background such an interpretation should be placed on Section 20 of
the Act which does not lead to an anomalous result causing hardship
to the party who may have acted with utmost diligence and because of
the inaction on the part of the Court a contemner cannot be made to
suffer. Interpreting the section in the manner canvassed by Mr.
Venugopal would mean that the Court would be rendered powerless to
punish even though it may be fully convinced of the blatant nature of a
contempt having been committed and the same having been brought to
the notice of the Court soon after the committal of the contempt and
within the period of one year of the same. Section 20, therefore,
has to be construed in a manner which would avoid such an anomaly
and hardship both as regards the litigant as also by placing a pointless
fetter on the part of the Court to punish for its contempt. An
interpretation of Section 20, like the one canvassed by the Appellant,
which would render the constitutional power of the Courts nugatory in
taking action for contempt even in cases of gross contempt,
successfully hidden for a period of one year by practising fraud by the
contemner would render Section 20 as liable to be regarded as being
in conflict with Article 129 and/or Article 215. Such a rigid
interpretation must therefore be avoided.
The decision in Om Prakash Jaiswal's case (supra), to the effect
that initiation of proceedings under Section 20 can only be said to
have occurred when the Court formed the prima facie opinion that
contempt has been committed and issued notice to the contemner to
show-cause why it should not be punished, is taking too narrow a
view of Section 20 which does not seem to be warranted and is not
only going to cause hardship but would perpetrate injustice. A
provision like Section 20 has to be interpreted having regard to the
realities of the situation. For instance, in a case where a contempt of
a subordinate court is committed a report is prepared whether on an
application to Court or otherwise, and reference made by the
subordinate court to the High Court. It is only thereafter that a High
Court can take further action under Section 15. In the process, more
often than not, a period of one year elapses. If the interpretation of
Section 20 put in Om Prakash Jaiswal's case (supra) is correct, it
would mean that notwithstanding both the subordinate court and the
High Court being prima facie satisfied that contempt has been
committed the High Court would become powerless to take any
action. On the other hand, if the filing of an application before the
subordinate court or the High Court making of a reference by a
subordinate court on its own motion or the filing an application before
an Advocate-General for permission to initiate contempt proceedings
is regarded as initiation by the Court for the purposes of Section 20,
then such an interpretation would not impinge on or stultify the power
of the High Court to punish for contempt which power, dehors the
Contempt of Courts Act, 1971 is enshrined in Article 215 of the
Constitution. Such an interpretation of Section 20 would harmonise
that section with the powers of the Courts to punish for contempt
which is recognised by the Constitution.
A question arose before a Full Bench of the Punjab & Haryana
High Court in the case of Manjit Singh and Others vs. Darshan
Singh and Others with regard to the application of Section 20 to the
proceedings of criminal contempt. After coming to the conclusion
that on the language of Section 20 the date when time begins to run is
fixed from the point on which the criminal contempt is alleged to have
been committed the Court had to decide the terminating point or the
terminus ad quem for the limitation under Section 20 of the Act. Four
possibilities which fell for consideration in this regard were: (i) the
date on which the actual notice of contempt is issued by the Court; (ii)
the date on which the Advocate General moves the motion under
Section 15(1)(a); (iii) the date on which a subordinate Court makes a
reference of the criminal contempt under Section 15(2) of the Act and,
(iv) the date on which any other person prefers an application to the
Advocate-General for his consent under Section 15(1)(b) of the Act.
On behalf of the State, the contention raised before the Full Bench
was that the sole terminus ad quem was the date of the actual issuance
of the notice of criminal contempt by the Court and reliance in this
behalf was inter alia placed on the above mentioned decision of this
Court in Baradakanta Mishra's case. The Full Bench, in our opinion,
rightly came to the conclusion that the sole question which arose for
consideration in Baradakanta Mishra's case related to the
interpretation of Section 19 of the Act and no question of interpreting
or applying Section 20 was at all in issue. Following the dictum of
Lord Halsbury in Quinn vs. Leathem that a case is only an
authority for what it actually decides and cannot be quoted for a
proposition that may even seem to follow logically therefrom, the Full
Bench correctly observed that Baradakanta Mishra's case was no
warrant for the proposition that the issuance of a notice of criminal
contempt by the High Court is the sole terminus ad quem for
determining limitation under Section 20 of the Act. The Court then
proceeded to observe in paras 13 and 19 as follows:
"13. Once that is so, one must now proceed to analyse and
construe S.20 independently. A plain reading thereof would
indicate that the legislature drew a clear line of distinction betwixt
proceedings for contempt initiated by the Court on its own
motion, and those not so done. Suo motu action by the High
Court is thus clearly a class by itself. Consequently the statute in
express terms refers to these two classes separately, namely, any
proceedings for contempt on Court's own motion, and
proceedings for contempt initiated "otherwise". The use of the
word 'otherwise' is significant and indeed provides the clue to be
the true interpretation of Sec. 20. Therefore, initiation of
contempt proceedings otherwise than on Court's own motion
would include within its sweep a motion by the Advocate
General, a reference by a subordinate Court to the High Court to
take action for contempt and an application before the Advocate
General seeking his consent by any other person under S. 15 and
lastly in cases of civil contempt the motion by a private litigant
directly in the Court.
"19. To finally conclude it must be held that the terminus a quo
for limitation begins under Section 20 of the Act on the date on
which the contempt is alleged to have been committed. The
terminus ad quem in case of criminal contempt would necessarily
vary and be related to the modes of taking cognizance thereof
provided for in S. 15. In cases where it is initiated on the
Court's own motion it would necessarily be from the issuance of
the notice for contempt by the Court. In case of a motion by the
Advocate General under S. 15(1)(a), the proceedings would
initiate from the date of the filing of such a motion in the High
Court. Where any other person moves the Advocate General for
his consent in writing as prescribed in S. 15(1) (b), the initiation
of proceedings would be with effect from the date of such
application. Lastly, in cases of criminal contempt of a
subordinate Court on a reference made by it the proceedings must
be deemed to be initiated from the date when such reference is
made."
Action for contempt is divisible into two categories, namely,
that initiated suo motu by the Court and that instituted otherwise than
on the Court's own motion. The mode of initiation in each case
would necessarily be different. While in the case of suo motu
proceedings, it is the Court itself which must initiate by issuing a
notice. In other cases initiation can only be by a party filing an
application. In our opinion, therefore, the proper construction to be
placed on Section 20 must be that action must be initiated, either by
filing of an application or by the Court issuing notice suo motu, within
a period of one year from the date on which the contempt is alleged to
have been committed.
It was submitted on behalf of the Appellant that even if the
provisions of Section 20 do not bar the High Court from taking action
if proceedings are initiated by the filing of an application within a
period of one year of the contempt having been committed, in the
present case the period of limitation must be regarded as having
expired long before the filing of the application by the Custodian and,
therefore, no action on such an application could be taken by the
Court.
The record discloses that the Custodian received information of
the Appellant having committed contempt by taking over benami
concerns transferring funds to these concerns and operating their
accounts clandestinely only from a letter dated 5th May, 1998 from the
Income Tax Authorities. It is soon thereafter that on 18th June, 1998 a
petition was filed for initiating action in contempt and notice of issue
by Special Court on 9th April, 1999. Section 29(2) of the Limitation
Act, 1963 provides where any special or local law prescribes for any
suit, appeal or application a period of limitation different from the
period prescribed by the Schedule, the provisions of Section 3 shall
apply as if such period were the period prescribed by the Schedule and
for the purpose of determining any period of limitation prescribed for
any suit, appeal or application by any special or local law, the
provisions contained in Sections 4 to 24 (inclusive) shall apply insofar
as, and to the extent to which, they are not expressly excluded by such
special or local law. This Court in the case of Kartick Chandra Das
and Others (supra) has held that by virtue of Section 29(2) read with
Section 3 of the Limitation Act, limitation stands prescribed as a
special law under Section 19 of the Contempt of Courts Act, 1971 and
in consequence thereof the provisions of Sections 4 to 24 of the
Limitation Act stand attracted.
Section 17 of the Limitation Act, inter alia, provides that
where, in the case of any suit or application for which a period of
limitation is prescribed by the Act, the knowledge of the right or title
on which a suit or application is founded is concealed by the fraud of
the defendant or his agent (Section 17(1)(b)) or where any document
necessary to establish the right of the Plaintiff or Applicant has been
fraudulently concealed from him (Section 17(1)(d)), the period of
limitation shall not begin to run until the Plaintiff or Applicant has
discovered the fraud or the mistake or could, with reasonable
diligence, have discovered it; or in the case of a concealed document,
until the Plaintiff or the Applicant first had the means of producing the
concealed document or compelling its production. These provisions
embody fundamental principles of justice and equity, viz, that a party
should not be penalised for failing to adopt legal proceedings when the
facts or material necessary for him to do so have been wilfully
concealed from him and also that a party who has acted fraudulently
should not gain the benefit of limitation running in his favour by
virtue of such fraud.
The provisions of Section 17 of the Limitation Act are
applicable in the present case. The fraud perpetuated by the Appellant
was unearthed only on the Custodian receiving information from the
Income Tax Department, vide their letter of 5th May, 1998. On
becoming aware of the fraud application for initiating contempt
proceedings was filed on 18th June, 1998, well within the period of
limitation prescribed by Section 20. It is on this application that the
Special Court by it's order of 9th April, 1999 directed the application
to be treated as a show cause notice to the Appellant to punish him for
contempt. In view of the abovestated facts and in the light of the
discussion regarding the correct interpretation of Section 20 of the
Contempt of Courts Act it follows that the action taken by the Special
Court to punish the Appellant for contempt was valid. The Special
Court has only faulted in being unduly lenient in awarding the
sentence. We do not think it is necessary, under the circumstances to
examine the finding of the Special Court that this was a continuing
wrong or contempt and, therefore, action for contempt was not barred
by Section 20.
For the aforesaid reasons, these appeals are dismissed and the
impugned judgment of the Special Court is affirmed. The Appellant
will, within a week, surrender and serve out the sentence awarded to
him by the Special Court.
