• A last chance for amnesty



Pradhan Mantri Garib Kalyan Yojana,

The amendments to the Income Tax law passed by the Lok Sabha now offer those with unaccounted cash a last shot at amnesty. They can pay half their cash as tax and deposit a quarter into a new Pradhan Mantri Garib Kalyan Yojana. Those who fail to do this voluntarily for bank deposits made since November 8 would end up retaining about 15 per cent of the total amount if they cannot establish a legitimate source for the funds. There is a Robinhood-esque edge to the PMGKY approach, directly linking the war on black money to welfare of the poor. Essentially an extension of the recent Income Disclosure Scheme that cleaned up about Rs.65,000 crore of undeclared income by levying 45 per cent tax, the December 30 deadline for bank deposits in demonetised notes gives a more purposeful push to the effort to clean out all the cash in the grey economy. The scheme for disclosing foreign assets last year had yielded just about Rs.2,400 crore in taxes, so a tougher approach was perhaps necessary to instil real fear among habitual tax evaders. Since the demonetisation of currency notes worth an estimated Rs.14.18 lakh crore, nearly Rs.8.45 lakh crore has been brought back into the system. If the proportion of notes deposited or exchanged is in line with their circulation prior to November 8, about Rs.2.56 lakh crore in Rs.1,000 notes and Rs.3.17 lakh crore worth of Rs.500 notes (that can be spent on exempted categories till December 15 is still out there.

Many clever ploys have been attempted to subvert this drive and convert black money into white: hiring people to exchange currency; tapping cash-in-hand entries of firms to launder illicit cash; pumping funds into bank accounts for the poor; purchasing goods in bulk where old notes are still allowed; even tipping off the taxman to conduct search-and-seizure operations on one’s own premises to avail of a provision that allows individuals to pay a mere 10 per cent penalty on such income if they admit to it. The government is trying to close the door on such ingenuity, and the latest tax law changes should be seen in this context. By early January, it will be clear how much money has been mopped up by the demonetisation operation. There is, however, no doubt that this tax manoeuvre is a neater way of gaining fiscal headroom than extinguishing the Reserve Bank of India’s liabilities to the extent of unreturned old Rs.500 and Rs.1,000 notes, and turning that into a special dividend to the exchequer.

  • Treat contempt with contempt


Markandey Katju,

The Supreme Court recently created history by issuing a contempt notice against one of its own former judges, Justice Markandey Katju. After retiring from office, Justice Katju has been known for making some very controversial remarks on social media. He has said that “90 per cent of Indians are idiots”, that Gandhi was a British agent, and that Kashmir and Bihar should be offered to Pakistan as a “package deal”. More recently, he put up a post on Facebook in which he called a former Chief Justice of the Supreme Court “one of the most corrupt judges in India”. Since then, Justice Katju has made insinuations — again on Facebook — against the Supreme Court judge who issued the contempt notice against him. Although there is a right to free speech in India, no person can say anything here which “scandalises the court”, i.e., which lowers a court’s dignity or shakes public confidence in the judiciary. However, Justice Katju’s remarks, unbalanced though they may be, offer an opportunity for the Supreme Court to reconsider whether “scurrilous abuse” of judges should attract summary punishment under Indian law.

Blaze of glory

India got its law on “scandalising the court” from England. One of the earliest such cases decided there was R v. Almon (1765). A publisher in Piccadilly, London, had printed a pamphlet which accused Chief Justice Mansfield of acting “officiously, arbitrarily, and illegally”. He was hauled up for contempt of court. Justice Wilmot held that courts would lose all their authority if people were told that “Judges at their Chambers make Orders or Rules corruptly”. The purpose of the law of contempt, said Justice Wilmot, was “to keep a blaze of glory” around judges.

However, the doctrine of scandalising the court was used very sparingly in England thereafter. In a case decided in 1968, Lord Denning said that contempt of court must not be used to protect the dignity of courts, because “[t]hat must rest on surer foundations”. In 1974, the Phillimore Committee wrote in its report that most scandalous attacks against judges were best ignored because they usually came from “disappointed litigants or their friends” and to initiate proceedings against them would “merely give them greater publicity”. In 2012, the Law Commission there found that though there was a lot of abusive material directed against English judges, particularly online, much of it was “too silly” to be taken seriously. It was also noted that judges had successfully used civil defamation laws, instead of contempt of court, to penalise wrongdoers. For example, in 1992, Justice Popplewell succeeded in a defamation suit which he filed against the Today newspaper which had insinuated that he had fallen asleep during a murder trial. Eventually, in 2013, England abolished the offence of scandalising the court altogether.

Likewise, courts in the U.S. do not have the power to punish anyone for scandalising the court. In Bridges v. California (1941), Justice Felix Frankfurter of the U.S. Supreme Court called the doctrine of “scandalising the court” an example of English “foolishness”. In another case, Justice William O. Douglas wrote that judges are supposed to be “men of fortitude, able to thrive in a hardy climate”, who should be able to shrug off contemptuous statements.

From Davar to Tarkunde

Scandalising the court was an offence in colonial India much in the same manner as it was in England at the time. For instance, in 1908, the Bombay High Court hauled up N.C. Kelkar, publisher of Bal Gangadhar Tilak’s English-language newspaper, The Mahratta, for contempt. At the time, Justice Dinsha Davar had sentenced Tilak to be transported to a prison in Burma for six years upon his conviction for sedition. A July 1908 article in the paper accused Justice Davar of dishonestly colluding with the government for securing Tilak’s conviction. The article referred to Davar as “a medical quack in a red robe (and)… an impudent glow-worm holding his torch to the Sun.” Chief Justice Basil Scott in his judgment said that the article had “(overstepped) the bounds of fair criticism” by indulging in “scurrilous abuse” of Justice Davar.

When the Constitution was enacted in independent India, contempt of court was made an exception to the right to free speech, with very little debate in the Constituent Assembly. Consequently, the enactment of the Constitution made virtually no difference to the law on scandalising the court. For instance, in the 1960s, a defamation suit had been filed by Krishnaraj Thackersey against the prominent Bombay tabloid, Blitz, in the Bombay High Court. The case was decided by Justice V.M. Tarkunde, who awarded damages of Rs.3 lakh to Thackersey. Soon thereafter, an article appeared in the periodical Mainstreamwhich alleged that Justice Tarkunde’s close relatives had been given a large loan from Bank of India, in which Thackersey was a director, as a quid pro quo for the judgment. The article was not very direct in making this point, but it made insinuations and relied on innuendos. Finding this to be in contempt of court, in Perspective Publications v. State of Maharashtra, the Supreme Court held that “the obvious implications and insinuations” in the article “immediately create a strong prejudicial impact” in the minds of the readers “about the lack of honesty, integrity and impartiality” of Justice Tarkunde in deciding the libel suit.

It is not contempt of court for a person to say, as Justice Katju has, that a Supreme Court judge “does not know an elementary principle of law”. This is intemperate criticism, not “scurrilous abuse”. However, since Justice Katju has questioned the integrity of a Supreme Court judge as well, he could be held in contempt of court unless he is either able to prove that his allegations were true or he unconditionally apologises to the court. However, one wonders if it is now time for India to reconsider whether courts should have the power to summarily punish those who make such statements. Are Justice Katju’s comments not, as the U.K. Law Commission wrote in 2012, “too silly” to be taken seriously? Are Indian judges not, as Justice Douglas said, “men of fortitude, able to thrive in a hardy climate”? Contempt powers today are unnecessarily designed to try and maintain a good public image for the judiciary. However, muzzling trenchant criticisms against judges will not preserve public confidence in courts. A person’s faith or confidence in a court will, after all, depend on the work that the court does, not on what people are publicly allowed to say about it. In the words of Justice Frank Murphy of the U.S. Supreme Court, “Silence and a steady devotion to duty are the best answers to irresponsible criticism”.

Of course, courts must have powers to preserve the dignity and decorum of day-to-day proceedings. For example, if a person starts shouting slogans during an ongoing court proceeding, flings a shoe at a judge hearing a case, or calls him corrupt in open court, the judge must have the power to remove that person from court and to penalise him so as to prevent this from happening again. But wild, scurrilous abuse heaped on judges on blogs or social media websites are perhaps best left ignored.


  • Punjab’s legislative adventurism


Sutlej-Yamuna Link (SYL) Canal,

There was never any doubt that Punjab’s legislative adventurism in enacting a law in 2004 to terminate all previous agreements on sharing the waters of the Ravi and the Beas with its neighbours would not survive judicial scrutiny. Answering a Presidential reference on the validity of Punjab’s action, the Supreme Court has declared the State’s law illegal . It has ruled that Punjab reneged on its solemn promises by terminating its 1981 agreement with Haryana and Rajasthan to discharge itself of the obligation to construct the Sutlej-Yamuna Link (SYL) Canal. Its objective was to overcome the 2004 decree passed by the Supreme Court directing it to complete the canal work expeditiously. The court’s reasoning draws from previous verdicts relating to the Cauvery and Mullaperiyar disputes, reiterating the principle that “a State cannot, through legislation, do an act in conflict with the judgment of the highest court which has attained finality.” It is another matter if legislation takes the form of a validating Act to cure specific illegalities or one that removes the basis for a particular verdict. The verdict by a five-member Bench is a timely reminder that it would be destructive of the rule of law and federalism if a State were to be allowed to usurp judicial powers by nullifying a verdict that has rendered findings on both fact and law.

As Punjab heads for the Assembly election, this issue has already led to posturing by all major parties on which among them is the best protector of the State’s interests. This attitude leads to a disturbing tendency among States to be judges in their own cause, especially when it comes to water disputes. Political parties in power increasingly resort to legislation or Assembly resolutions rather than negotiation. The Opposition parties collaborate in this with equal zeal, lest they be seen to be wanting in passion for the cause. Punjab may well have had legitimate grievances, historically, in the sharing of waters. This was, in fact, the reason the Rajiv-Longowal accord of 1985 contained clauses relating to river-water sharing too. Earlier, differences were first settled by a notification by the Centre in 1976. When the matter led to litigation, Prime Minister Indira Gandhi brokered an agreement in 1981. In effect, the present arrangements, which Punjab seeks to wriggle out of, are backed by three agreements. The Supreme Court ruled against Punjab in 2002 as well as in 2004. The State’s obligation to allow the completion of the SYL Link Canal, so that Haryana can utilise the share of water allocated to it, cannot be frustrated any more. If Punjab feels aggrieved, there may be scope for negotiation and conciliation even now, but it cannot take action unilaterally.