Pallav Sheth v. Custodian
Supreme Court of India, 10 August 2001
Section 20 of the Contempt of Courts Act, 1971, read so as not to stultify Articles 129 and 215, applies; save in suo motu cases, filing the application initiates proceedings; Section 17 of the Limitation Act covers fraudulent concealment.
Facts
The appellant submitted to a consent decree of about Rs. 51.49 crores in favour of a notified party under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, and defaulted after paying Rs. 2 crores. In execution the Special Court restrained him from alienating his assets in 1994. In 1997 the Income Tax Department searched him, and by a letter of 5 May 1998 told the Custodian that he was the de facto owner of five companies into which money had been moved. The Custodian applied on 18 June 1998 for punishment for contempt. The Special Court treated the application as a show cause notice on 9 April 1999 and in 2001 held him guilty of civil contempt, sentencing him to one month's simple imprisonment and a fine of Rs. 2,000. On appeal he argued only that the proceedings were barred by Section 20.
Questions before the Court
- Whether Section 20 of the Contempt of Courts Act, 1971 can limit the power of the Supreme Court and High Courts to punish for contempt under Articles 129 and 215.
- When are proceedings for contempt 'initiated' within the meaning of Section 20.
- Whether Section 17 of the Limitation Act, 1963 applies where the contempt was concealed by fraud, and whether the proceedings here were within time.
What the Court held
- A law on the quantum of punishment, what is contempt, or a period of limitation does not abrogate or stultify the contempt jurisdiction under Article 129 or Article 215; they should be exercised in consonance with a validly enacted law, and if Section 20 is read so as not to stultify them, a reasonable period of limitation can be provided.
- Under Section 20, action must be initiated within one year of the alleged contempt either by filing an application or, in suo motu cases, by the Court issuing notice. Om Prakash Jaiswal's view that initiation occurs only when the Court issues a show cause notice takes too narrow a view.
- The observations on Section 20 in Baradakanta Mishra were obiter dicta, as that case decided only the maintainability of an appeal under Section 19.
- By Section 29(2), Section 17 of the Limitation Act applies to Section 20, so time runs from discovery of the fraud. The application filed on 18 June 1998, soon after the letter of 5 May 1998, was in time; the conviction was affirmed and the appellant directed to surrender.
Why it matters
The judgment holds that Parliament may regulate the exercise of the constitutional contempt powers of the Supreme Court and High Courts, including by a period of limitation, so long as the law does not stultify those powers. It settles that a contempt proceeding not taken suo motu begins with the filing of the application, disapproves the narrower view in Om Prakash Jaiswal, treats the Section 20 remarks in Baradakanta Mishra as obiter, and applies the fraud rule in Section 17 of the Limitation Act to contempt.
In the Court's words
Copied from the official judgment; each passage links to its page.
“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.”
“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.”
“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.”
“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.”
Provisions interpreted
- Section 20, Contempt of Courts Act, 1971
- Article 129, Constitution
- Article 215, Constitution
- Section 17, Limitation Act, 1963
- Section 29(2), Limitation Act, 1963
- Section 11-A, Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992
Case and bench
- Parties
- Pallav Sheth v. Custodian & Ors.
- Case
- Civil Appeal No. 2106 of 2001 with Civil Appeal No. 2107 of 2001
- Decided
- 10 August 2001
- Bench
- Kirpal, Brijesh Kumar, Ruma Pal
- Opinions
- Judgment of the Court delivered by Kirpal, J. No separate opinion appears in the file.
Questions on this case
2 questions in live Law Maker papers mention this case. Practise them with the landmark judgments questions.