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SUPREME COURT OF INDIA
H.L. DATTU, CJI., MADAN B. LOKUR, A.K. SIKRI, JJ.
SUNIL BHARTI MITTAL – APPELLANT
VERSUS
CENTRAL BUREAU OF INVESTIGATION – RESPONDENT
CRIMINAL APPEAL NO. 34 OF 2015 (arising out of Special Leave Petition (Crl.) No. 2961 of 2013) WITH CRIMINAL APPEAL NO. 35 OF 2015 (arising out of Special Leave Petition (Crl.) No. 3161 of 2013) A N D CRIMINAL APPEAL NOS. 36-37 OF 2015 (arising out of Special Leave Petition (Crl.) No. 3326-3327 of 2013)
Decided on: 09-01-2015
(1993) 2 SCC 16; (2014) 3 SCC 306 – Relied upon
(b) Administration of Justice – Criminal liability – Criminal intent of the “alter ego” of company would be imputed to the company/corporation – Instantly, however, the principle is applied in exactly reverse scenario – Trial court attributing and imputing acts of company to appellants – Runs contrary to principle of vicarious liability – Not permissible. (Para 35, 36)
(2005) 4 SCC 530; (2011) 1 SCC 74; (2012) 5 SCC 661; (2010) 10 SCC 479; (2008) 5 SCC 662; (1984) Supp. SCC 207; (1989) 4 SCC 630; (2003) 5 SCC 257; (2008) 5 SCC 668; (2009) 1 SCC 516; (2009) 3 SCC 375; (2009) 6 SCC 475; (2013) 4 SCC 505 – Relied upon
(2012) 3 SCC 1; (2007) 1 SCC 110; (2012) 3 SCC 132; (1996) 6 SCC 129 – Referred
(c) Code of Criminal Procedure, 1973 – Section 190 – Taking cognizance – Not defined in the Code – A Magistrate deciding to proceed u/s 200-203 – Said to have taken cognizance of an offence – Can take cognizance against any person even if not named in charge sheet – Only requirement is that prima facie case should be made out. (Para 41, 42, 43)
(2008) 2 SCC 492 – Relied upon
(d) Code of Criminal Procedure, 1973 – Sections 190, 319 and 204 – Person not joined as accused in charge-sheet can be summoned u/s 190 – Section 319 does not apply at this stage – Process can be issued u/s 204 if prima facie case is made out – Discretion to grant or refuse to issue process must be judiciously exercised – Application of mind and proper satisfaction of Magistrate to be stated in the order – If the reason given turns out to be incorrect, the order would be bad in law – Impugned order not sustainable. (Para 44, 45, 46, 47, 48)
(2001) 6 SCC 670; (2003) 6 SCC 195 – Relied upon
Facts of the case:
This case relates to 2G scam.
During monitoring of the investigation of 2G Spectrum Case, Supreme Court vide its order dated 16.12.2010 directed CBI to investigate the irregularities committed in the grant of licences from 2001 to 2007 with partial emphasis on the loss caused to the public exchequer and corresponding gain to the Licensees/Service Providers. Accordingly, in compliance to the said order, a Preliminary Enquiry vide No. PE-DAI-2011-A-0001 was registered on 04.01.2011 at CBI, ACB, New Delhi. During inquiry of the said PE, it was learnt from reliable sources that vide a decision dated 31.01.2002 of the then MoC&IT, on the recommendation of certain DoT officers, the allocation of additional spectrum beyond 6.2 MHz upto 10 MHz (paired) was approved wherein only 1% additional revenue share was charged thereby causing revenue loss to Government exchequer.
On the basis of the outcome of the aforesaid inquiry, a regular case was registered on 17.11.2011 for the offences punishable under Sections 120-B IPC r/w 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988. It was against Mr. Shyamal Ghosh, Mr. J.R. Gupta and the three Cellular Companies
The allegation, in nutshell, is for grant of additional spectrum by lowering the condition of 9 lacs subscribers to 4/5 lacs subscribers, by only charging additional 1% AGR instead of charging additional 2% AGR which has caused losses to the Government Revenue. It is further the case of the prosecution that this was the result of conspiracy hatched between Mr. Shyamal Ghosh and the then Minister as well as the accused Cellular Operator Companies.
In this charge-sheet, CBI named Mr. Shyamal Ghosh and the three companies namely M/s Bharti Cellular Limited, M/s Hutchison Max Telecom (P) Limited and M/s Sterling Cellular Limited as the accused persons in respect of offences under Section 13(2) read with 13(1)(d) of the PC Act and allied offences.
Special Judge passed orders dated 19th March, 2013 recording his satisfaction to the effect that there was enough incriminating material on record to proceed against the accused persons. At the same time, the learned Special Judge also found that Mr. Sunil Bharti Mittal was Chairman-cum-Managing Director of Bharti Cellular Limited, Mr. Asim Ghosh was Managing Director of Hutchison Max Telecom (P) Limited and Mr. Ravi Ruia was a Director in Sterling Cellular Limited, who used to chair the meetings of its Board. According to him, in that capacity, these persons, prima facie, could be treated as controlling the affairs of the respective companies and represent the directing mind and will of each company. They were, thus, “alter ego” of their respective companies and the acts of the companies could be attributed and imputed to them. On this premise, the Special Judge felt that there was enough material on record to proceed against these three persons as well. Thus, while taking cognizance of the case, he decided to issue summons not only to the four accused named in the charge-sheet but the aforesaid three persons as well.
The appellants were not implicated as accused persons in the charge-sheet. As discussed in some details at the appropriate stage, Mr. Mittal was interrogated but in the opinion of CBI, no case was made out against him. Mr. Ravi Ruia was not even summoned during investigation.
Finding of the Court:
Impugned judgment is not sustainable.
Result:
The appeals arising out of SLP (Crl.) No. 2961 of 2013 and SLP (Crl.) No. 3161 of 2013 filed by Mr. Sunil Bharti Mittal and Ravi Ruia respectively are, accordingly, allowed and order summoning these appellants is set aside. The appeals arising out of SLP (Crl.) Nos. 3326-3327 of 2013 filed by Telecom Watchdog are dismissed.
The legal document discusses the scope and application of the powers of a trial court and magistrate to summon persons not named in the charge sheet, specifically in the context of criminal proceedings involving corporate and individual defendants. It emphasizes that a magistrate can summon any person if there is sufficient prima facie material to proceed against them, even if they are not initially named in the charge sheet, provided the record discloses such material (!) (!) .
The principle of "alter ego" is examined critically, clarifying that criminal intent or acts of a company's controlling persons are generally imputed to the company, not vice versa. The application of this principle must be in the correct legal direction—typically, acts of individuals in control are attributed to the company, but acts of the company are not automatically imputed to such individuals unless specific statutory provisions or circumstances justify it (!) (!) .
Furthermore, the document underscores that the power to take cognizance of an offence is vested with the magistrate, who can proceed against persons not named in the charge sheet if the material on record indicates their involvement. The magistrate must apply their mind judiciously, and the order to summon must be based on proper satisfaction that sufficient prima facie evidence exists (!) (!) .
It is also highlighted that the exercise of powers under specific sections of criminal procedure, such as Sections 190 and 204, allows courts to initiate proceedings against uncharged individuals if the evidence suggests their involvement. The process involves careful judicial scrutiny, and reasons for summoning or proceeding against a person must be explicitly recorded to withstand legal scrutiny (!) (!) .
Finally, the document stresses that erroneous assumptions or incorrect legal principles cannot justify the issuance of summons or proceedings against individuals or entities. Such orders should be revisited and, if necessary, annulled unless subsequent evidence during trial justifies their inclusion (!) (!) .
In summary, the legal principles affirm that courts have the authority to summon non-named persons if prima facie evidence exists, but this authority must be exercised with proper application of mind, based on record, and within the bounds of established legal principles concerning vicarious liability, the role of controlling persons, and the scope of criminal liability of corporations and individuals.
Judgment
A.K. SIKRI, J.
Leave granted.
Introduction:
2. In the year 2008, during the tenure of the then Minister of Telecommunications, Unified Access Services Licenses (“UASL”) were granted. After sometime, an information was disclosed to the Central Bureau of Investigation (CBI) alleging various forms of irregularities committed in connection with the grant of the said UASL which resulted in huge losses to the public exchequer. On the basis of such source information, the CBI registered a case bearing RC DAI 2009 A 0045 on 21st October, 2009. It is now widely known as “2G Spectrum Scam Case”. The case was registered against unknown officers of the Department of Telecommunications (DOT) as well as unknown private persons and companies.
3. While the investigation into the said case was still on, a writ petition was filed by an NGO known as Center for Public Interest Litigation (CPIL) before the High Court of Delhi seeking directions for a Court monitored investigation. Apprehension of the petitioner was that without such a monitoring by the Court, there may not be a fair and impartial investigation. Delhi High Court dismissed the petition.
4. Challenging the order of the Delhi High Court, CPIL filed Special Leave Petition before this Court under Article 136 of the Constitution of India. At that time, another petitioner, Dr. Subramanian Swamy, directly approached the Supreme Court by way of a writ petition under Article 32 of the Constitution of India seeking almost the same reliefs on similar kinds of allegations. Leave was granted in the said SLP, converting it into a civil appeal. Said civil appeal and writ petition were taken up together for analogous hearing. On 16th December, 2010, a detailed interim order was passed in the civil appeal inter alia giving the following directions:
“a. The CBI shall conduct thorough investigation into various issues highlighted in the report of the Central Vigilance Commission, which was forwarded to the Director, CBI vide letter dated 12.10.2009 and the report of the CAG, who have prima facie found serious irregularities in the grant of licences to 122 applicants, majority of whom are said to be ineligible, the blatant violation of the terms and conditions of licences and huge loss to the public exchequer running into several thousand crores. The CBI should also probe how licences were granted to large number of ineligible applicants and who was responsible for the same and why the TRAI and the DoT did not take action against those licensees who sold their stakes/equities for many thousand crores and also against those who failed to fulfill roll out obligations and comply with other conditions of licence.
b. The CBI shall, if it has already not registered first information report in the context of the alleged irregularities committed in the grant of licences from 2001 to 2006-2007, now register a case and conduct thorough investigation with particular emphasis on the loss caused to the public exchequer and corresponding gain to the licensees/service providers and also on the issue of allowing use of dual/alternate technology by some service providers even before the decision was made public vide press release dated 19.10.2007.”
5. Thereafter, detailed judgment was passed by the Bench of this Court in the aforesaid proceedings on 2nd February, 2012 which is reported as Centre for Public Interest Litigation & Ors. v. Union of India & Ors., (2012) 3 SCC 1. The Court allowed the appeal as well as the writ petition, holding that spectrum licences were illegally granted to the beneficiaries at the cost of the nation. The Court accordingly cancelled the licences granted to the private respondents on or after 10.01.2008 and issued certain directions for grant of fresh licences and allocation of spectrum in 2G Band. It was also specifically clarified that the observations in the said judgment would not, in any manner, affect the pending investigation by the CBI, Directorate of Enforcement and other agencies
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