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Case Comment: Sahara India Real Estate Corporation Ltd. and Others v. Securities and Exchange Board of India and Another, MANU/SC/0735/2012

Yashomati Ghosh

The Universal Declaration of Human Rights (1948) had recognized a set of rights as inalienable to mankind for the purpose of protecting human dignity and freedoms. Two of the most essential rights recognized by this Magna Carta of Human Rights are the right to freedom of speech and expression and the right to fair trial. These two rights are generally considered as integral and inalienable for protecting the essential elements of liberty and freedom in a democratic society governed by rule of law. In the era of telecommunications, media has assumed a position of great significance in both protecting and promoting free speech, access to information and protecting major socio-economic, civil, political and cultural rights of the people. Both traditional media like newspaper, television and radio, and new age media like internet and the social networking sites, twitter feeds, facebook updates, blogs, youtube videos etc are playing a significant role towards this effort. But many a times the various inalienable rights granted to the individuals comes in conflict with each other and a conscious effort needs to be made to bring a balance between the different concerns. A traditional area of tripartite conflict is between the media, citizens and the judiciary. It is an essential right of the media to freely promote access to information and free and fair speech; right of the individuals to protect their privacy and personal integrity relating to their jobs, family, business, religious beliefs etc.;, and right of the judiciary to render free and fair resolutions to disputes between the parties and promote proper administration of justice. The five judge bench decision in the case of Sahara India v. SEBI (2012) is a renewed effort to resolve the traditional controversy by the highest court of judicature in India.

The fundamental rights chapter of the Constitution of India has conferred certain rights to the citizens as fundamental for the promotion of justice, equality and liberty. Article 19 of the Constitution has recognized fundamental rights like freedom of speech and expression, to assemble without peacefully and without arms, to form associations or unions, to move freely and reside in any part of India and to practice any profession or occupation, or conduct any business or trade. Other articles of the Constitution has granted additional rights and freedoms like right to life and liberty, religious and cultural freedom, freedom from human exploitation and atrocities, and right to equality. But none of these rights are absolute in nature and are always subjected to reasonable restrictions for the benefit and well being of the larger sections of the society. Article 19(2) of the Constitution recognizes certain important grounds of reasonable restrictions on the freedom of speech and expression like ‘in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign states, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence.’ (emphasis added)

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The power of contempt is a power granted to the judiciary to protect the honour and dignity of the judicial system in the eyes of the common people. It was traditionally referred to as scandalum justiciae curia meaning scandalising the judges. Under the common law it was a power which was granted to the Court of Records which enjoyed the triple power of determining their jurisdiction, power to record their proceedings and the power to punish for contempt for itself. The power was granted so as to prevent ‘insult to judges, attacks upon them, comment on pending proceedings with a tendency to prejudice fair trial, obstruction to officers of courts, witnesses or the parties, abusing the process of the court, breach of duty by officers connected with the court and scandalizing the judges of the courts’. (E.M.Sankaran Namboodripad v. T.N.Nambiar AIT 1970 SC 2015) The Indian courts have traditionally enjoyed the power to punish for contempt of itself.  After independence the Constitution of India granted the power to the Supreme Court and the High Court under Articles 129 and 215 respectively, and by virtue of the power granted to the Union Parliament under Entry 77 of List 1 the Contempt of Court Act 1971 was enacted for the purpose of granting all the other courts the power to punish for contempt of itself. Section 2 of the Act empowers the judiciary to take legal actions against civil contempt as well as criminal contempt. The law relating to civil contempt enables the court to prevent willful disobedience to any judgment, decree, direction, order, writ or other process of a court or willful breach of an undertaking given to a court whereas the criminal contempt empowers the court take penal actions against the publication of any matter or doing of anything which scandalizes or lowers the authority of any court, prejudices or interferes with the due course of any judicial proceeding, or interferes or obstructs the administration of justice. Any act which has the tendency to do or have any of such consequences is also subjected to penal actions. The criminal contempt is essential to protect the majesty of the entire judicial system and ensure the proper functioning of the administration of justice. The statute recognizing the constitutional obligation to balance the right of the people to enjoy freedom of speech and expression with the proper functioning of the legal system has provided for certain exceptions to the general rule of contempt. Section 4 of the Act provides that any fair and accurate reporting of a judicial proceeding or any stage thereof will not amount to contempt.

In the present case the respondents the Security Exchange Board of India (SEBI) had passed an order against the appellants Sahara India (Sahara) on 18.10.2011 directing them to refund certain amounts which were invested with them under certain Optionally Fully Convertible Bonds (OFCD). An appeal before the Supreme Court was filed challenging the SEBI order. During the pendency of the appeal the Supreme Court passed an order directing Sahara to submit in detail the manner in which they intended to secure their liability to the OFCD holders to SEBI. In pursuant to the court orders negotiations took place between Sahara and SEBI to determine the sufficiency of the security to be provided for the purpose of meeting the liability. On 7.02.2012 the counsel for Sahara sent a personal letter to the counsel of SEBI stating the details of the security which would ensure proper repayment of the liabilities to OFCD investors and act as pre-condition for the stay of the SEBI orders during the pendency of the appeal before the Supreme Court. A Valuation Certificate detailing out the fair market value of the assets which are offered as security was also submitted with the letter. This information submitted by Sahara were subsequently flashed by a television news channel on its news coverage a day prior to the date of hearing before the Supreme Court. On the date of hearing Shri Fali . S. Nariman, senior counsel for the Sahara expressed his anguish before the court for the breach of confidentiality by SEBI for disclosing the confidential business information to media personnel which were submitted by the company for the sole purpose of acting as a security for their financial liabilities, but SEBI had strongly denied that the alleged disclosure of information had taken place at their instance. However, the Supreme Court took  note of the gravity of this incident and requested both parties to make an application to the Court for the purpose of laying down important guidelines relating to Sections 2, 3 and 4 of the Contempt of Court Act 1971, that is, right of the press to make fair and accurate reporting of matters which were sub judice in nature but were matters of great public importance and concern, right of individuals to protect their privacy and restrain the publication of their personal and business communications by third parties, and the duty of the court to ensure proper administration of justice by preventing all interferences and obstructions. On the application of Sahara, which was supported by SEBI, guidelines were requested to be issued by the Court relating the legality of public disclosure of documents which were part of court proceedings and the manner and extent to which the print and electronic media could give publicity to such documents.

The two primary rights on the basis of which the debate was structured was with reference to rights of the citizen to negotiate in confidence and her ability to defend herself fairly in a court of law and the right of the media to freely express ideas and information. Both these rights have their origin in common law and are presently considered as essential human rights, but in the recent years the tendency to commit trial by the media and their attempt to prejudge and condemn certain individuals and issues adversely affects the principles of rule of law in a country. While delivering the opinion Chief Justice Kapadia compared the law relating to free speech in some of the leading jurisdictions of the world. In the United States traditionally primacy has been granted to free speech and any attempt to restrain the scope of First Amendment is considered with great skepticism by the judiciary. The freedom of the press is generally considered as an absolute right and the freedom to access, report and comment on sub-judice matters is deemed to be within the permissible scope. Any form of pre-publication censorship is considered as unlawful and no legal actions can be initiated against the media for pre-judging a pending matter. In case the action of the media had obstructed the fairness in a trial the judiciary devised innovative procedural measures like change of venue, ordering re-trial, reversal of conviction on appeal etc. which would neutralize the adverse effect of prejudicial publicity. Such ‘neutralizing devices’ created by the US judiciary have traditionally balanced the rights of the private individuals, freedom of the media and the maintenance of judicial neutrality and independence. In comparison to the US, the English judiciary has conferred primacy to the proper and fair administration of justice over the right to free speech of the media. Fairness in trial and public confidence in the judicial system was deemed to be essentials in a rule of law determined society. But after the opinion of the European Court of Human Rights (ECHR) in the case of Sunday Times v. United Kingdom (1979) 2EHRR 245 a balance is tried to be maintained between the rights of the media and fair trial. The judiciary has recognized pre-publication censorship of a report for the purpose of preventing any prejudice or interference with the administration of justice and the same was recognized in Section 4(2) of the English Contempt of Courts Act 1981. The English courts have recognized ‘contempt is an offence sui generis’ and have held that postponement orders can be passed to prevent risk of prejudice in trials. In the continental countries rights of private individuals like ‘privacy, personal dignity and presumption of innocence’ have been conferred superior protection, hence the rights of the media is not only subject to the principles of fair trial but also with the rights of the private individuals. The ECHR has advocated the application of the doctrine of proportionality (as propounded by the Indian Supreme Court in the case of Chintaman Rao v. The State of Madras (1950) SCR 759) as the basis for determining the balance between two competing rights. The Canadian courts have adopted a combination of the necessity test and proportionality test i.e. ‘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; 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.’

The Indian judiciary has traditionally recognized the importance of free speech as a facet of right to know and an essential element of democracy. But for the purpose of balancing the interests of competing parties the courts have traditionally granted legal recognition to pre-censorship or issued prior restraint orders in certain exceptional circumstances for a limited period of time. Such postponement orders could only be issued when all other alternative measures like postponement of trial or change of venue are not considered as feasible alternates by applying the dual test of necessity and proportionality. The party seeking such orders would be required to substantiate their arguments by highlighting the ‘real and substantial risk of prejudice’ and overridingly displacing the important concerns of open justice principles by indicating that extent to which the publication will interfere with the administration of justice. The courts shall evaluate the prejudice suffered by each individual under the touchstone of Article 21 and after analyzing the necessity in each case will issue the postponement orders. It shall apply the test of societal interest justification as the basis for determining the scope and extent of the reasonable restriction under Article 19(2). The postponement orders are deemed to be neutralizing devices which will prevent possible contempt by the media and ensure fairness in trial.

The judgment in the present case has assumed significance for multiplicity of reasons like re-visiting the entire jurisprudence of contempt law in India and comparing it with the legal positions in other countries, determining the scope of reasonable restrictions in the fundamental rights chapter in the Indian Constitution, clarifying the scope law making power of the Supreme Court under Article 141, highlighting the role of media in the context of right to know and conferring special protection to business related confidential information by upholding the right of individuals to negotiate and settle matters in confidence. The judgment can be appreciated for recognizing and upholding the important role of media in society but at the same time conferring due importance to the private rights of individuals and granting due protection to both rights under the touchstones of constitutional guarantee. This judgment has also been interpreted as introducing media censorship and preventing future trial by the media. The most important consequence of this judgment is the widening of the scope of contempt law. It has been traditionally determined that there is per so no lis applicable in a contempt proceedings because the apparent scope of the law is protecting the majesty of the court and ensuring proper functioning of the judicial processes, but in this case the power of contempt has been extended to act as a remedy in the hands of private individuals to seek remedy for protection of private and confidential matters from the purview of media glare. In the words of Supreme Court, “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.” The decision is likely to assume greater significance in the future with the continuous spread of media and their interventions in all facets of our life. The judgment has provided a new tool on based the neutralizing device theory to restrain the peeping media but in light of the vagueness in the Supreme Court guidelines and case by case approach based on application of real and substantial risk test may cause additional overburdening of the judicial responsibility, add to the docket of pending cases and cause further delay in the decision making process. It is further essential for the Supreme Court to lay down certain criteria for determining the scope of application of the contempt power and for the purpose of interpreting ‘societal interest’ like rights of the accused, trade secrets, business communications, privacy, witness protection etc for the benefit of lower courts, media and individuals for the purposes of clarity and certainty.

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