MAY 19, 2021

By Vijay Kumar

IN the midst of the scary covid, writing GST is perhaps blasphemy. A couple of my columns in recent weeks peeping into the functioning of the tax department about five decades ago were well received. So, I venture to take you to another interesting story - not very long ago, as stories go.

You must have heard about the recent demise of one of the doyens of DRI - Mr. ML Wadhavan.

Mr. AK Pande, a former DG, DRI wrote about him in our columns in 2012:

ON the anti-smuggling or preventive side, it is difficult to find a match for Shri M.L.Wadhawan, when it comes to consistent performance of a high order during the entire career. He had held many challenging posts, including that of Director General of Revenue Intelligence, for a record period of six years during eighties, and that of Collector of Customs (Preventive), Mumbai, earlier, during one of the most turbulent periods, when smuggling was at its peak and preventive detention law was introduced for the first time in 1975 and all leading smugglers were detained first under MISA and then COFEPOSA. He is credited with detection of some of the biggest cases of smuggling during his different tenures in DRI and preventive formations. He became synonymous with excellence in preventive work. His investigations always had that imprint of incisiveness and thoroughness. No one else has handled so many sensitive cases as he did in his career. He remained unflappable even in most difficult of situations, always principled and uncompromising in his integrity. He had his unmistakable impact.

DRI honoured Wadhawan with the first "DRI Utkrisht Seva Samman, 2018" and used the same words as that of AK Pande in the citation.

M.L. Wadhawan belonged to the 1956 batch of IRS. He started his career in January 1957 as an Indian Customs Service Officer. In his career spanning for more than 3 decades he served the department in various capacities. Shri Wadhawan was the longest serving Director General of DRI. He retired as the Additional Secretary. He was the Founding Director General of Central Economic Intelligence Bureau in December 1985, prior to which he was serving as Member, CBEC.

In the year 2000, another IRS Officer, ZB Nagarkar filed a criminal case against Wadhawan. The interesting details of the case culled from a judgement of the Bombay High Court are as follows:

This is an application seeking quashing of proceedings in Criminal Case No. 1051/S/2000 filed against ML Wadhawan and two others by ZB Nagarkar before the Metropolitan Magistrate, Andheri, Mumbai.

ML Wadhawan is a retired high-ranking Customs Officer, who works as a consultant and represents his clients in proceedings before Customs authorities. ZB Nagarkar was working as Collector of Customs at Kandla.

On 30th July 1993, a team of officers from Department of Revenue Intelligence (D.R.I.) at Kandla port detected ball bearings in place of lead scrap which was shown to be imported. Investigations showed that the consignee industry did not exist at the given address.

A Show Cause Notice was issued in 1994 with an addendum in 1998, in which Nagarkar was also a noticee. The allegation was that he had knowingly connived and abetted in the smuggling of ball bearings imported under the guise of lead scrap. He (Nagarkar) gave a reply to the said notice, denying the allegations made. In the proceedings pursuant to the notice, accused Nos. 1 and 2 were represented by Wadhawan as their consultant/authorized representative. Wadhawan submitted a final written submission signed by him alone on behalf of accused Nos. 1 and 2 on 31.3.1999, allegedly prepared after carefully studying replies of other noticees and detailed briefing from accused Nos.1 and 2. According to Nagarkar, this final written submission signed by Wadhawan alone for the first time disclosed and contained false, untrue, scurrilous, derogatory and disparaging imputations.

According to Nagarkar, the Commissioner (Adjudication) by his order dated 29.10.1999, absolved him of all the charges and levied a penalty of Rs. 25 lacs on accused No.1. According to him, Wadhawan made the allegations against him without any inquiry or care or caution, actuated by ill- will, malice and improper motive personal to Wadhawan and not by any desire to protect the interests of accused nos. 1 and 2. He, therefore, filed a complaint of offence punishable under section 500 of the Penal Code ( Punishment for defamation) against Wadhawan. The Magistrate directed issuance of process. Aggrieved thereby, Wadhawan appealed to the High Court.

According to Wadhawan he had made the written submission only as per instructions of the co-accused, which contains true and correct reflection of statements which the co-accused made and by which they stood. They were made in adjudication proceedings as a consultant and authorized representative of the co-accused without any intention to distribute the same to members of public. He submitted that the statements were fully covered by 8th and 9th exceptions enumerated in section 499 of the Penal Code and that he was entitled to special protection as he had acted as representative of the co-accused.

He further submitted that the order exonerating Nagarkar has been challenged before the appellate tribunal. Therefore, according to Wadhawan, the proceedings before the magistrate ought to be quashed. (What happened to the appeal in the tribunal? I will tell you that towards the end of this piece.)

Wadhawan submitted that he was in the position of an advocate and, therefore, could not be held responsible for what his clients wanted him to state, though the final written submissions were not signed by the clients.

He submitted that he was in the position of an advocate representing accused Nos. 1 and 2, and, therefore, could not be hauled up by a criminal court for what he essentially stated on their behalf.

He submitted that in case of an advocate or a pleader representing a party in a judicial proceeding, it has to be presumed that the advocate was acting in good faith.

The Court held:

1. There can be no absolute privilege to anyone and the reasonable view would be that the court would have to begin with the presumption that an advocate acted in good faith.

2. Further, an advocate has such a protection because he is first an officer of the court and then a representative or spokesman of his clients. His duty towards the court would first require him to exercise his own discretion, common sense and caution before putting a defamatory statement. Secondly as a member of the bar, he is subject to high standards of professional conduct and is amenable to the disciplinary jurisdiction of the Bar Council. It is these safeguards which clothe an advocate with the protection of presumption of having acted in good faith.

3. The applicant - Wadhawan may have held very high offices in the Customs department. But he is not an advocate on the roll of the Bar Council. He is a mere representative of his clients.

4. Therefore, even if it is taken for a while that the proceeding in which he filed the "final written submissions" were being conducted before an authority which could be taken to be on par with a court in the traditional sense, he cannot have protection which an advocate may claim.

To sum up, the Court observed,

The applicant - Wadhawan cannot claim same protection as an advocate could get for his statements in a judicial proceeding, as he does not belong to the profession.

Therefore, the Criminal application of Wadhawan was rejected by the High Court.

Mr. Wadhawan took the case in appeal to the Supreme Court and the Supreme Court in 2016 quashed the criminal proceedings filed by ZB Nagarkar in the Magistrate Court.

What happened to the adjudication by Commissioner (adjudication) dated 29.10.1999 by which Nagarkar and others were absolved?

The department preferred an appeal before the CESTAT which decided the appeal in 2003 mostly against the department. In para 71 of the judgment, the tribunal observed that the then other Commissioner of Customs at Kandla - presumably Nagarkar, had failed to co-ordinate the investigations and to give correct direction to the whole proceedings. The department filed an SLP before the Supreme Court which was dismissed.

The Tribunal order had a caustic remark that there is evidence in this case to show that the officers were associating too closely with CHA, which is inappropriate, given the nature of their duties.

It was also pointed out in the High Court on behalf of Nagarkar, who had retired in the meantime, that the departmental disciplinary proceedings against him were dropped by the department by order dated 2nd November 2001.

A happy ending for all the dramatis personae.

PS: ZB Nagarkar is also a famous personality with a landmark Supreme Court judgement in his name - Zunjarrao Bhikaji Nagarkar vs Union of India - 2002-TIOL-130-SC-CX

Please also see - A student's view of two SC judgements : Z B Nagarkar and Duli Chand

Until Next Week.