How the Legal Fraternity Remembers Khehar’s Controversial Sahara Judgment

By ATUL DEV | 28 August 2017

On a frigid December evening in 2016, Virendra Kumar, a retired professor who served as the chairperson of the law department in Panjab University, went to Delhi to meet his former student, Jagdish Singh Khehar, who was about to be appointed the 44th chief justice of India. During the conversation, the professor later told me, Khehar said, “Doctor saab, aapne jo realist movement padhaya tha schools of jurisprudence mein, uska ab maine yahan Supreme Court mein istemal kiya hai”—the philosophy of legal realism, which you taught me about in the schools of jurisprudence course, I have used it here in the Supreme Court.

I met Kumar at his house in Chandigarh in February 2017 while I was reporting the cover story for the June issue of this publication. In the piece, I examined the history of the tussle between the executive and the judiciary, and Khehar’s impact on it during his short tenure as chief justice, which ended on 27 August. When Kumar brought up his meeting with the chief justice, we were discussing a 2014 judgment in which Khehar dismissed the bail plea of Subrata Roy, the founder and chairman of Sahara Group. At present, Roy is out on parole, which is scheduled to last until 10 October.

Kumar was not the only person I discussed this with. Over the course of my reporting, I met over 70 people—lawyers, legal academics, and present as well as former members of the higher judiciary. Several of them—without my asking—termed Khehar’s Sahara judgment as their favourite of his oeuvre.

This was surprising. Though the former chief justice will likely be remembered most for the judgments passed in the final week of his tenure—on the question of privacy as a fundamental right, and triple talaq—even at the time I was reporting, he had already authored judgments that were far more consequential than jailing Roy. For instance, not long before he was named chief justice, Khehar led a five-judge bench that struck down the 99th constitutional amendment, which proposed the setting up of the National Judicial Appointments Commission, or the NJAC, to make appointments to the higher judiciary. Khehar’s judgment ensured that for the foreseeable future, the power to appoint judges would remain with the judiciary. It is not possible to unpack the individual points of view I heard, since most people asked to remain anonymous, or refused to speak on the record. Broadly, though, it can be said that those who sang praises of the judgment were most delighted by Khehar’s dressing-down of Roy’s counsel—some of the most eminent lawyers of the country.

But the second—and perhaps more intriguing—reason this choice is surprising is that, as some of the worried detractors pointed out, the judgment appears not to follow the due process of law. The sceptics, though far fewer, were disturbed—in the words of a former judge—by the “abrogation of due process” and the precedent it set.

In June 2011, the Securities and Exchange Board of India had directed two real-estate companies under the Sahara group—the Sahara Commodity Services Corporation Limited and the Sahara Housing Investment Corporation Limited—to refund Rs 17,000 crore to over two crore investors, who had bought bonds of these companies. Acting on complaints it received, SEBI had been investigating the affairs of the two companies, and had found them dubious. Further, the companies failed to provide SEBI records of their investors, prompting the regulatory body to suspect wrongdoing. The SEBI order named Roy, as well as Ravi Shankar Dubey and Ashok Roy Choudhary—both directors with the Sahara group.

The companies and the directors challenged this order at the Securities Appellate Tribunal, but the tribunal upheld the order. In November 2011, Roy approached the Supreme Court to challenge the tribunal’s decision. A bench led by Chief Justice SH Kapadia admitted the plea, and the case was listed before a two-judge bench comprising Khehar and Justice KS Radhakrishnan.

The country, at the time, was reeling under an unending list of corruption scandals that had overshadowed the entire polity in the previous couple of years. From the allocation of coal blocks and telecom licences, to building highways and hosting international sporting events, every project appeared to be a façade, put up with the sole interest of generating kickbacks from corporate behemoths.

In August 2012, the bench pronounced its judgment, and upheld the SEBI order. It asked Roy, Dubey and Choudhary to refund the money to the investors with 15 percent interest.

In a separate judgment, after listing the technicalities of the fraud, Khehar devoted a paragraph to highlighting the power equation between Sahara and the investors. “It seems the two companies collected money from investors, without any sense of responsibility to maintain records, pertaining to funds received,” he wrote, quoting the SEBI order. Khehar continued:

It is not easy to overlook, that the financial transactions under reference are not akin to transactions of a street hawker or a cigarette retail made from a wooden cabin. The present controversy involves contributions which approximate Rs 40,000 crores, allegedly collected from the poor rural inhabitants of India. Despite restraint, one is compelled to record, that the whole affair seems to be doubtful, dubious and questionable.

It was a moral argument, and Khehar’s conviction in this respect would only get stronger. In December 2012, a separate bench of the court issued an order permitting Roy and the directors to complete the payment in three instalments. Over the course of the hearing, the court extended the deadline for this payment by 90 days.

In February, the bench comprising Radhakrishnan and Khehar asked SEBI what action it had taken against the companies for not having completed the payments. SEBI subsequently froze the accounts and attached the properties of the companies. Through 2013, the bench heard several contempt pleas filed by SEBI against the companies, Roy, Dubey and Choudhary. The court issued several notices to Roy, asking him to appear in court and explain why contempt charges shouldn’t be brought against him. Roy failed to appear before the court.

In late February 2014, the bench issued a non-bailable warrant against Roy, directing that he be kept under police custody until the next hearing. On 4 March, the police produced Roy in court. The bench, clearly out of patience, ruled that Roy and the directors were guilty of contempt of court, and passed an order to send them to Tihar jail.

This order was by no means in accordance with the process prescribed in the Code of Criminal Procedure, which instructs that the offender be given “a reasonable opportunity of showing cause why he should not be punished.” Further, the Contempt of Court Act of 1971 allows that a court that feels that a person has been guilty of contempt “may cause [contemnor] to be detained in custody, and, at any time before the rising of the Court, on the same day, or as early as possible thereafter.” However, the act noted, this is possible is only after the person in question has been afforded “an opportunity to make his defence to the charge.”

Among the counsel for Roy was the veteran lawyer Ram Jethmalani. After the bench pronounced it decision on 4 March, he made a strong objection. “This is sheer injustice your lordships,” Jethmalani said. “My client is being sent to prison in a contempt case even without hearing arguments on the point of sentencing which is a right of every citizen and prescribed by the rule book. He was only arrested by the police to ensure his presence in the court and that has been done. Now he is entitled to be freed.” Without responding to Jethmalani, Khehar and Radhakrishnan rose from the bench, and left the courtroom.

Sahara’s counsel protested that this was a travesty of justice. A couple of weeks later, a petition signed by Jethmalani and Roy’s other counsels—the senior advocates Rajeev Dhavan, Rakesh Dwivedi, S Ganesh, and Ravi Shankar Prasad—was submitted before the court. It sought an overturning of Roy’s imprisonment, on the grounds that the order to jail Roy violated his right to life and personal liberty as a citizen—bestowed upon him, as on everyone else, by Article 21 of the constitution. At the hearing, Jethmalani further suggested that the members of the bench recuse themselves from hearing the case.

Arvind Datar, representing SEBI, objected. Datar alleged that the petition “was a carefully engineered device, adopted by the petitioner as a stratagem, to seek” the recusal of Khehar and Radhakrishnan. To emphasise that, according to him, the bench was being arm-twisted, Datar said that never in his life he had seen a petition to move to the court that had been signed by five senior counsel—all of them recognised eminence.

Datar’s submission struck a chord with the bench, but the most damaging to Roy were the submissions of his own counsel. An article in the Indian Express later observed that during the hearing, “the normal courtesies of courtroom presentation were abandoned.”

Jethmalani clarified his request for recusal by saying that hearing the petition could cause it embarrassment, since it sought an overturning of its own judgment. He added that his client had apprehensions of bias from the bench but, the court later noted, refused to “spell out the basis” for these. Further, Dhavan said that the court’s judgment to jail Sahara was a “terrible, terrible mistake,” because “it violated the civil liberties” of his client.

Khehar would have none of it. “If it was learned counsel’s posturing antics, aimed at bench-hunting or bench-hopping (or should we say, bench-avoiding), we would not allow that,” he later wrote. “Affronts, jibes and carefully and consciously planned snubs could not deter us, from discharging our onerous responsibility.”

He argued that since it was Radhakrishnan and him who had heard the Sahara case since 2012, no one would be better placed to hear this petition. “We had been taken through thousands of pages of pleadings. We had the occasion to watch the demeanour and defences adopted by the two companies and the contemnors from time to time, from close quarters,” he wrote. “For any other Bench to understand the nuances of the controversy … would require prolonged hearing of the matter. Months … would have to be spent again.”

He responded to some of the arguments made by Roy’s counsel in withering language. “Seriously,” he wrote, after quoting a submission by Jethmalani, “we were taken aback by the ferocity with which the above submissions were advanced. Had we been a part of the audience, we would have acclaimed the courage and the capacity of learned Senior Counsel, to be able to call a spade a spade. We would have felt, that their eminence was rightfully bestowed on them, and well deserved. That of course, would have been subject to the condition, that what was sought to be conveyed through erudite grandiloquence, was factually correct.”

To answer the questions about giving Roy a reasonable opportunity to explain himself, Khehar listed the dozens of dates between 2011 and 2013, when the matter was heard. This was enough time for Roy to comply with their order, he argued. During that time the court had also allowed Roy to go abroad. He reasoned that after repeated non-compliance, the court had passed subsequent orders seizing property and blocking foreign travel—Roy had not heeded these either.

“It is not possible for us to accept,” he wrote, “that while passing the above order, no opportunity was afforded to the Mr. Subrata Roy Sahara. Indeed, every response made by the alleged contemnors, was taken into consideration on each occasion. The alleged contemnors were found to be playing tricks with this court.”

Khehar questioned whether the delay that could be caused by a recusal was precisely the counsels’ motive in asking for it.

Was this the reason for the theatrics, of some of the learned Senior Counsel? Difficult to say for sure. But deep within, don’t we all understand?

That last line—don’t we all understand—is remarkable for its acknowledgement of a deeply cynical feeling that exists among Indians about the justice system: that for a certain class of people, who can afford to hire the most brilliant of legal minds, the body of law is a malleable thing.

Khehar’s judgment in the Sahara case, beyond its immediate implications, can be read as an argument against that feeling. He wrote: “Rather than the petitioner tendering his explanation to this Court, for not complying with the orders passed by it, the petitioner’s counsel were posing a question to this court to explain to them, the legitimacy of the procedure adopted by the court.”

In the final few pages, Khehar said that the Indian judicial system is grossly afflicted with “frivolous litigation.” Litigants like Sahara, Khehar continued, “derive their strength from abuse of the legal process,” before adding, “Counsel are available, if the litigant is willing to pay their fee.” He ended the judgment by suggesting to the government that it consider the introduction of a “Code of Compulsory Costs,” according to which “anyone who initiates and continues a litigation senselessly, pays for the same.”

Radhakrishnan would later say that the bench came under immense pressure during the Sahara case. Khehar, too, alluded to the debilitating nature of the case. “One wonders,” he wrote in the post-script,

what is it that a Judge should be made of, to deal with such litigants, who have nothing to lose. … What is it, that is needed to bear the affront, scorn and ridicule hurled at officers presiding over Courts? Surely one would need superhumans to handle the emerging pressures on the judicial system. The resultant duress is gruelling.

The day after pronouncing this judgment, Khehar recused himself from hearing any and all matters pertaining to Sahara. The next day, a new bench was constituted.

To this day, Rajeev Dhavan maintains that Khehar’s judgment was “unfair.” Dhavan has even claimed that, in a personal conversation, Radhakrishnan distanced himself from the more acerbic remarks in that judgment. Khehar, however, has conveyed no such afterthoughts.

The jurist Upendra Baxi, referring to the bench’s refusal to recuse itself from hearing the bail plea, said that Khehar invented a new doctrine regarding recusals in the subsequent judgment. “Earlier it used to be that the counsel will request and given enough reasons, the judges will recuse themselves from the case,” he said. “Khehar put a stop that practice. It is also a doctrine he expanded on later in the NJAC judgment.” (The petitioners had asked Khehar to recuse himself in the NJAC hearing as well, since he was part of the collegium, and would have been a member of the NJAC if it were constituted. Khehar refused then as well.)

During a later hearing, TS Thakur, whom Khehar later succeeded as chief justice, admitted that it was an “unprecedented situation of personal liberty on one hand and majesty of law on the other that compelled the court to take an extreme step.” Maintaining that the judgment was “unprecedented but justifiable,” Thakur commented that it was a case of legal realism where the approach was influenced by the necessity of “making the law work.”

But that explanation hardly addresses the critical concerns regarding the judgment. “I do not know what provision of law allows for Sahara to be in jail,” a former member of the higher judiciary said. Another former judge, who served on the Supreme Court, said that the judgment sets a flawed precedent, which is more damaging to the cause of justice than anything that may have been achieved by that verdict.

Kumar, the retired professor, had a clear view on the subject. “Justice according to law,” the professor began. “Now what does that mean? Literally, it means that the notion of justice follows law. And what is the basic function of a judge? It is to do justice. Not law. You see, law is an instrument that we create ourselves; the notion of justice is far ahead of that. An updated law can be coterminous with justice, but invariably, with time, a gap develops.”

“All the criticism that you have cited to me about that judgment is made on the basis of the established legal norm,” Kumar said. “Now, he is breaking a norm, he is making a departure. It is for us to analyse and evaluate his decision. And, we should judge a judge on the basis of justness.”

“But we cannot just look at the end, right?” a lawyer told me, after taking a few moments to collect his thoughts. “[Roy] deserves to be in jail, sure. But could he not have been put there by the prescribed procedure?”

Atul Dev is a staff writer at The Caravan. 

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