Katju, a retired Supreme Court judge, hit back at Jaitley accusing him of twisting facts and asked him to quit politics.
Jaitley, in a statement here, said Katju's article in a newspaper against Modi read more like a personal tirade and wondered whether the former Supreme Court judge was trying to hold a brief for those who have been convicted in the Godhra train burning incident.
Katju had said that "there is still a mystery of what happened in Godhra" and he found it hard to believe "that Modi had no hand in 2002", referring to the Gujarat riots.
Referring to the Press Council of India Chairman's criticism of Modi and Bihar Chief Minister Nitish Kumar, Jaitley said,
"His attacks on non-Congress governments whether in West Bengal, Bihar or Gujarat seem more in the nature of thanks-giving to those who provided him with a post retirement job."
He took exception to Katju's remarks that the people of the country should not make the same mistake made by the Germans in 1933.
"I concede to Justice Katju the right to hold his political views, but can the occupant of a job whose functioning is quasi-judicial openly participate in political activity. His appeal is political. He appears to be more Congress than the Congress party," Jaitley said, adding he should "either quit before actively participating in politics or be sacked."
Katju, in turn, accused Jaitley of twisting facts and said that he had written "very strong" letters to Congress-ruled Maharashtra's Chief Minister Prithviraj Chavan over the arrest of two girls for a Facebook post after the death of Shiv Sena supremo Bal Thackeray.