Supreme Court of India
SUNIL BHARTI MITTALversusCENTRAL BUREAU OF INVESTIGATION
- Citation
- 2015 INSC 18
- Decided
- 9 January 2015
- Disposal
- Disposed off
- Bench
- H L DATTU
Holding
A Special Judge may summon a non‑named person only upon recording satisfaction that sufficient prima facie material exists, and the "alter ego" principle cannot be used to impute the company's acts to its directors in the absence of a statutory basis.
Summary
The Supreme Court examined whether a Special Judge could summon individuals who were not named in the CBI charge‑sheet in the 2G spectrum case, on the basis that they were the "alter ego" of the companies charged. The Court held that while a magistrate may summon a non‑named person if prima facie material exists, the Special Judge failed to record any such satisfaction and relied on an incorrect application of the alter‑ego doctrine, which runs contrary to the principle of vicarious liability. Consequently, the order summoning Sunil Bharti Mittal and Ravi Ruia was set aside. The Court clarified that vicarious liability in criminal law arises only when a statute expressly provides for it, and that the "alter ego" principle applies only to impute corporate intent to individuals, not the reverse. The appeals were allowed and the summons quashed, while other related appeals were dismissed.
Issues considered
- The power of a Special Judge to summon persons not named in a charge‑sheet under CrPC.
- Whether the "alter ego" doctrine can be used to attribute corporate acts to individual directors when the company is the accused.
- The requirement of recorded satisfaction of prima facie material before issuing summons.
- The applicability of vicarious liability in criminal law absent a statutory provision.
Legislation cited
- Code of Criminal Procedure, 1973s. 190, s. 200, s. 201, s. 202, s. 203, s. 204, s. 319
- Negotiable Instruments Act, 1881s. 141
- Prevention of Corruption Act, 1988s. 13(1)(d), s. 13(2)
Subjects
alter ego doctrinevicarious liabilitysummonscharge sheet2G spectrum scamCorporate criminal liabilitySection 190 CrPCSection 319 CrPCCorporate governance
Judgment
[2015] 1 S.C.R. 377
SUNIL BHARTI MITTAL A
v.
CENTRAL BUREAU OF INVESTIGATION
(Criminal Appeal No. 34 of 2015)
JANUARY 09, 2015
B
[H.L. DATTU, CJI, MADAN 8. LOKUR AND
A.K. SIKRI, JJ.]
Scams - 2G Spectrum Scam Case - Summoning of
appellants not implicated as accused persons in the charge c
sheet by CBI - Sustainability of - Policy decision of the
Government to allocate additional spectrum, extending benefit
to all Cellular Operating Companies including Pubic Sector
Companies like MTNL and BSNL etc. - Allegation of
irregularities in the grant of additional spectrum against the o
public servants and three cellular companies, which caused
revenue loss to Government Exchequer - Registration of
case by CBI - Charge sheet filed by CBI naming one public
servant and three cellular companies - Order passed by the
Special Judge, CBI whereby appellants-chairpersons and E
managing director of the respective cellular companies not
implicated as accused persons in the charge-sheet by CBI,
summoned by Special Judge since they represented the
directing mind and will of each company, they are/were treated
as 'alter ego' of their respective companies and the acts of F
the companies could be attributed and imputed to them - On
appeal, held: Principle of 'alter ego' is that if the person or
group of persons who control the affairs of the company
commit an offence with a criminal intent, their criminality can
be imputed to the company as well as they are "alter' ego" of
the company - However, the said principle is applied in an G
exactly reverse scenario and would run contrary to the
principle of vicarious liability - While issuing summons
against the appellants, Special Magistrate took shelter under
377 H
378 SUPREME COURT REPORTS [2015] 1 S.C.R.
A a so-called legal principle, which turned out to be incorrect in
law - He did not record his satisfaction by mentioning the role
played by the appellants which would bring them within
criminal net - Trial court issued summons on an erroneous
presumption in law - Thus, order of summoning the
8 appellants set aside - However, appellants could be
summoned if incriminating materials are found against them
- Code of Criminal Procedure, 1973 - s. 319, 190.
Doctrines/Principles - Principle of 'alter-ego -
Application of
c
Disposing of the appeals, the Court
HELD: 1. Even when a person is not named in the
charge sheet as an accused person, the trial court has
adequate powers to summon such a non-named person
0
as well, if the trial court finds that the charge sheet and
the documents/material placed along with the charge-
sheet disclose sufficient prima facie material to proceed
against such a person as well. In the instant case, the
Special Judge did not state in the order that after
E examining the relevant documents, including statement
of witnesses, he is satisfied that there is sufficient
incriminating material on record to proceed against the
appellants as well. After recording his satisfaction qua the
four said accused persons, discussion about other three
F individuals (including the two appellants) starts from next
para where the Special Judge "also" finds and refers to
the positions which these three persons hold/held in the
three companies respectively. The Special Judge does
not mention about any incriminating material against
G them in the statement of witnesses or documents. On the
other hand, the reason for summoning these persons
and proceeding against them prima facie, are that these
persons were/are "in the control of affairs of the respective
companies; because of their controlling position, they
H
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 379
INVESTIGATION
represent the directing mind and will of each company; A
state of mind of these persons is the state of mind of the
companies. Thus, they are described as "alter ego" of
their respective companies. It is on this basis alone that
the Special Judge records that "in this fact situation, the
acts of companies are to be attributed and imputed to B
them". [Para 30, 31] [411-C-F; 412-C-G]
Standard Chartered Bank v. Directorate of Enforcement
2005 (1) Suppl. SCR 49: (2005) 4 SCC 530 - referred to.
2. The principle laid down in Iridium India Telecom C
Ltd. case is to the effect that the criminal intent of the
"alter ego" of the company, that is the personal group of
persons that guide the business of the company, would
be imputed to the company/corporation. The legal
proposition is that if the person or group of persons who D
control the affairs of the company commit an offence
with a criminal intent, their criminality can be imputed to
the company as well as they are "alter ego" of the
company. In the instant case, however, this principle is
applied in an exactly reverse scenario. Here, company is E
the accused person and the Special Magistrate observed
in the impugned order that since the appellants represent
the directing mind and will of each company, their state
of mind is the state of mind of the company and, therefore,
on this premise, acts of the company is attributed and F
i.mputed to the appellants. While issuing summons
against the appellants, the Special Magistrate took shelter
under a so-called legal principle, which turned out to be
incorrect in law. He did not recorded his satisfaction by
mentioning the role played by the appellants which would G
bring them within criminal net.This proposition would run
contrary to the principle of vicarious liability detailing the
circumstances under which a director of a company can
be held liable. [Paras 35, 36, 40] [417-C-G]
Iridium India Telecom Ltd. v. Motorola Inc. 2010 (14) H
380 SUPREME COURT REPORTS {2015] 1 S.C.R.
A SCR 591: (2011) 1 SCC 74; GHCL Employees Stock Option
Trust v. India lnfoline Ltd. (2013) 4 SCC 505 - referred to.
3.1 No doubt, a corporate entity is an artificial person
which acts through its officers, directors, managing
director, chairman etc. If such a company commits an
8
offence involving mens rea, it would normally be the
intent and action of that individual who would act on
behalf of the company. It would be more so, when the
criminal act is that of conspiracy. However, at the same
C time, it is the cardinal principle of criminal jurisprudence
that there is no vicarious liability unless the statute
specifically provides so. Thus, an individual who has
perpetrated the commission of an offence on behalf of a
company can be made accused, along with the company,
if there is sufficient evidence of his active role coupled ·
D with criminal intent. Second situation in which he can be
implicated is in those cases where the statutory regime
itself attracts the doctrine of vicarious liability, by
specifically incorporating such a provision. When the
company is the offendor, vicarious liability of the
E Directors cannot be imputed automatically, in the
absence of any statutory provision to this effect. [Para 37,
38, 39] [418-A-E]
Aneeta Hada v. Godfather Travels & Tours (P) Ltd. 2012
F (5) SCR 503 : (2012) 5 SCC 661; Maharashtra State
Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd 2010
(12) SCR 551: (2010) 10 SCC 479; S.K. Alagh v. State of
U.P. 2008 (2) SCR 1088 : (2008) 5 SCC 662; Jethsur
Surangbhai v. State of Gujarat 1984 SCR 797 : (1984) Supp.
G SCC 207; Sham Sunder v. State of Haryana 1989 (3)
SCR 886 : (1989) 4 SCC 630; Hira Lal Hari Lal Bhagwati v.
CBI 2003 (3) SCR 1118 : (2003) 5 SCC 257; Maksud Saiyed
v. State of Gujarat 2007 (9) SCR 1113 : (2008) 5 SCC 668;
R. Kalyani v. Janak C. Mehta 2008 (14) SCR 1249: (2009)
H 1 SCC 516; Sharon Michael v. State of T.N. 2008 (17)
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 381
INVESTIGATION
SCR 1412 : (2009) 3 SCC 375; Keki Hormusji Gharda v. A
Mehervan Rust6m Irani 2009 (9) SCR 183 : (2009) 6 SCC
475 - referred to.
~.2 Even if the CBI did not implicate the appellants,
if there was/is sufficient material on record to proceed
{ B
against these persons as well, the Special Judge is duly
empowered to take cognizance against these persons as
well under Section 190 of the Code. The expression
"taking cognizance" has not been defined in the Code.
Kowever, when the Magistrate applies his mind for
proceeding under Sections 200-203 of the Code, he is
c
said to have taken cognizance of an offence. Sine Qua
Non for taking cognizance of the offence is the application
of mind by the Magistrate and his satisfaction that the
allegations, if proved, would constitute an offence. It is,
therefore, imperative that on a complaint or on a police D
report, the Magistrate is bound to consider the question
as to whether the same discloses commission of an
offence and is required to form such an opinion in this
respect. When he does so and decides to issue process,
he shall be said to have taken cognizance. At the stage E
of taking cognizance, the only consideration before the
Court remains to consider judiciously whether the
material on which the prosecution proposes to prosecute
the accused brings out a prima facie case or not. [Paras
41, 42] [425-C, F, G; 426-D-F] F
S.K. Sinha, Chief Enforcement Officer v. Videocon
International Ltd & Ors. 2008 (2) SCR 36: (2008) 2 SCC 492
- referred to.
3.3 A wide discretion has been given as to grant or G
refusal of process and it must be judicially exercised. A
person ought not to be dragged into Court merely
because a complaint has been filed. If a prima facie case
has been made out, the Magistrate ought to issue process
and it cannot be refused merely because he thinks that H
382 SUPREME COURT REPORTS [2015] 1 S.C.R.
A it is unlikely to resµlt in a conviction. However, the words
"sufficient grounqs for proceeding" appearing in the
Section are of immense importance. It is these words
which amply suggest that an opinion is to be formed only
after due applicatioh of mind that there is sufficient basis
B for proceeding against the said accused and formation
of such an opinion is to be stated in the order'itself. The
order is liable to be set aside if no reason is given therein
while coming to the conclusion that there is prima facie
case against accused, though the order need not contain
c detailed reasons. A fortiori, the order would be bad in law
if the reason given turns out to be ex facie incorrect.
However, there has to be a proper satisfaction in this
behalf which should be duly recorded by the Special
Judge on the basis of material on record. No such
exercise is done. Thus, it is difficult to sustain the
0
impugned order in its present form insofar as i~ relates
to implicating the appellants and summoning them as
accused persons. [Paras 46, 47, 48] [427-G-H; 428-A-E]
3.4 Since on an erroneous presumption in law, the
E Special Magistrate issued the summons to the. appellants,
it would always be open to the Special Magistrate to
undertake the exercise of going through the material on
record and on that basis, if he is satisfied that there is
enough incriminating material on record to proceed
F against the appellants as well, he may pass appropriate
orders in this behalf. Even if at this stage, no such prima
facie material is found, but during the trial, sufficient
incriminating material against these appellants surfaces
in the form of evidence, the Special Judge shall be at
G liberty to exercise his powers under Section 319 of the
Code to rope in the appellants by passing appropriate
orders in accordance with law at that stage. [Para 49]
[428-H; 429-A-B]
SWIL Ltd. v. State of Delhi 2001 (1) Suppl. SCR 527:
H
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 383
INVESTIGATION
(2001) 6 SCC 670; Union of India v. Prakash P. Hinduja and A
another 2003 (1) Suppl. SCR 307: (2003) 6 SCC 195;
Centre for Public Interest Litigation & Ors. v Union of India &
Ors. (2012) 3 SCC 1; Lee Kun Hee, President, Samsung
Corpn., South Korea v. State of Uttar Pradesh 2012 (4)
SCR 287 : (2012) 3 SCC 132; Keshav Mahindra v. State of B
M.P. 1996 (6) Suppl. SCR 285: (1996) 6 SCC 129 - referred
to.
Case Law Reference:
2010 (14) SCR 591 Referred to Para 18, 33, c
34
2010 (12) SCR 551 Referred to Para 18
2008 (2) SCR 1088 Referred to Para 18
D
2012 (5) SCR 503 Referred to Para 18
2012 (4) SCR 287 Referred to Para 24
1996 (6) Suppl. SCR 285 Referred to Para 25
2005 (1) Suppl. SCR 49 Referred to Para 33 E
1984 SCR 797 Referred to Para 39
1989 (3) SCR 886 Referred to Para 39
2003 (3) SCR 1118 Referred to Para 39 F
2007 (9) SCR 1113 Referred to Para 39
2008 (14) SCR 1249 Referred to Para 39
2008 (17) SCR 1412 Referred to Para 39
G
2009 (9) SCR 183 Referred to Para 39
(2013) 4 sec 505 Referred to Para 40
2008 (2) SCR 36 Referred to Para 42
H
384 SUPREME COURT REPORTS [2015] 1 S.C.R.
A 2001 (1) Suppl. SCR 527 Referred to Para 44
2003 (1) Suppl. SCR 307 Referred to Para 44
CRIMINAL AP PELLATE JURISDICTION : Criminal Appeal
No. 34 of 2015
B
From the Judgment and Order dated 19-03-2013 of Ld.
Special Judge (2G Spectrum Cases) of Patiala House Courts
at New Delhi in C.C. 01 of 2012 arising out of R.C. DAI 2011
A 0024.
c WITH
Criminal Appeal Nos. 35 and 36-37 of 2015
Pinky Anand, ASG, Fali Nariman, Amit Desai, K.V.
D Vishwanathan, K.K. Venugopal, Anand Grover, N. Ganpathy,
Percival Billimoria, Siddharth Agarwal, Kamal Shankar, Gautam
Khazanchi, Subhash Sharma, Utkarsh Saxena, Atul N., Mahesh
Agarwal, Rishi Agrawala, Neeha Nagpal (For E.C. Agrawala),
Sunil Malhotra, Kuna! Malhotra, Abhishek Vikas; Gopal
E Sankaranarayanan, Sonia Mathur, Meenakshi Grover, Rohit
Bhat, Suhasini Sen (For D.S. Mahra & B.V. Balaram Das),
Prashant Bhushan, Pranav Sachdeva, Nikhil Borwankar,
Sonam Anand, Chitralekha Das, Mihir Samson, for the
appearing parties.
F The Judgment of the Court was delivered by
A.K. SIKRI; J. 1. Leave granted.
Introduction:
G 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
H grant of the said UASL which resulted in huge losses to the
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 385
INVESTIGATION [A.K. SIKRI, J.]
public exchequer. On the basis of such source information, the A
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. B
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 C
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 D
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, E
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 a/ia giving the following directions:
F
"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, G
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 H
386 SUPREME COURT REPORTS [2015] 1 S.C.R.
A 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
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
c 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."
D
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. 1 . The Court allowed the appeal
E 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 g(~Dted to the
private respondents on or after 10.01.2008 and issued certain
directions for grant of fresh licences and allocation of spectrum
F 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 or cause prejudice to those
who are facing prosecution in the cases registered by the CBI
G or who may face prosecution on the basis of charge-sheet(s)
which may be filed by the CBI in future. The Court also made it
clear that the Special Judge, CBI would decide the matter
uninfluenced by the judgment dated February 02, 2012.
H 1. (2012) 3 sec 1.
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 387
INVESTIGATION [A.K. SIKRI, J.]
Thereafter, order dated 11.04.2011 was passed in that very A
appeal, making its intention manifest that this Court would be
monitoring the investigation by CBI in larger public interest.
Special Court was set up for trial of the 2G case and a Senior
Advocate was nominated as the Special Public Prosecutor by
the Court itself, who also agreed with his appointment in that B
capacity. The Court also made it clear that no other Court would
stay or impede trial conducted by the Special Court and the
aggrieved person could approach this Court for any grievance.
In the present proceedings, we are not concerned with the
. subject matter of the said trial. However, the aforesaid narrative c
became necessary to point out that present proceedings
triggered as a result of order dated 16.12.2010 vide which the
Court directed CBI to register a case and conduct the inquiry
in connection with alleged irregularities in grant of licences from
2001 to 2006-2007 as well. Further, as would be noticed later,
D
the investigation pertaining to this period also is being
monitored by the Supreme Court and the learned counsel for
all the parties were at ad idem that challenge to the impugned
order is to be entertained by this Court only under Article 136
of the Constitution, though while entertaining these appeals, the
E
Court would bear in mind the parameters of Section 482 of the
Code of Criminal Procedure, 1973 (hereinafter referred to as
"the Code").
The Instant Proceedings : Factual Narration
F
6. The CBI registered another RC being RC DAI 2011 A
0024 on 17th November, 2011 with regard to alleged
irregularities in grant of additional spectrum in the year 2002
during the tenure of late Shri Pramod Mahajan as Minister of
Communications. In this RC, apart from Shri Pramod Mahajan, G
others who were named were Mr. Shyamal Ghosh, the then
Secretary (Telecom), Mr. J.R. Gupta, the then Deputy Director
General (VAS) and three Cellular Companies viz. Mis Bharti
Cellular Limited, M/s Hutchison Max Telecom (P) Limited and
Mis Sterling Cellular Limited. After registering the said RC, the
H
388 SUPREME COURT REPORTS [2015] 1 S.C.R.
A CBI started investigation into the allegations contained therein.
As already pointed out above, since the matter was being
monitored by this Court, progress reports of investigation were
filed from time to time in sealed envelopes. On 29th November,
2012, after perusing certain documents presented in a sealed
B cover, this Court directed the CBI to take action in accordance
with the views expressed by it on the issue of prosecution of
public servants and the companies in connection with the said
case. The precise nature of this order can be seen from the
actual language thereof which is reproduced hereunder:
c "At the commencement of hearing in connection with CBI
Case No. RC DAI 2011 A 0024, Shri K.K. Venugopal,
learned senior counsel appearing for the Central Bureau
of Investigation placed before the Court a sealed envelope,
which was opened in the Court.
D.
We have perused the papers contained in the sealed
envelope and are of the view that the CBI shall take action
in accordance with the views expressed by the Director,
CBI on the issue of prosecution of public servants and the
E companies in connection with the said case.
The report produced by Shri Venugopal shall be put in
sealed cover and handed over to the counsel instructing
Shri Venugopal. The needful has been done.
F List the case on 05.12.2012.
To be taken up at 3.30 P.M."
7. On completion of the investigation, charge-sheet was
filed by the CBI in the Court of Shri O.P. Saini, the learned
G ppecial Judge, on 21st December, 2012.
8. Before proceeding further, it would be prudent to
mEl_ntion in brief the case set up by the CBI in the charge-sheet
to have the flavour of the prosecution case. Though we are not
H much concerned about the merits of the allegations in these
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 389
INVESTIGATION [A.K. SIKRI, J.]
proceedings, a brief account thereof will facilitate in A
understanding the background leading to the roping in of the
appellants in these proceedings. During monitoring of the
investigation of CBI Case No. RC-DAl-2009-A-0045 (2G
Spectrum Case), this Court vide its order dated 16.12.2010
directed CBI to investigate the irregularities committed in the B
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-DAl-2011-
A-0001 was registered on 04.01.2011 at CBI, ACB, New Delhi. c.
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 D
charged thereby causing revenue loss to Government
exchequer.
9. As pointed above, on the basis of the outcome of the
aforesaid inquiry, a regular case was registered on 17.11.2011
E
for the offences punishable under Sections 120-B IPC r/w 13
(2) and 13 (1 )(d) of the Prevention of Corruption Act, 1988 (for
short, 'PC Act'). It was against Mr. Shyamal Ghosh, Mr. J.R.
Gupta and the three Cellular Companies, names whereof have
already been mentioned above. The main allegation is that
additional spectrum beyond 6.2 MHz upto 10 MHz (paired) was F
approved at an additional revenue share at the rate of 1% only,
meaning thereby the said additional revenue should have been
at a higher rate. As per the investigation, Cellular Operators
Association of India (COAi) had made a request to DoT, in the
year 2001, for allocating additional spectrum particularly in Delhi G
and Mumbai service areas. On this, Technical Committee was
constituted which gave its report on 21.11.2001 recommending
therein that 6.2 MHz spectrum was sufficient for a subscriber
based out of about 9 lacs per operator in service areas like
H
390 SUPREME COURT REPORTS [2015] 1 S.C.R.
A Delhi and Mumbai for another 24-30 months. The Committee
also recommended to levy incremental charges for additional
spectrum. However, on 31.01.2002, a note was put up by Mr.
J.R. Gupta mentioning therein that a consensus had emerged
after discussion that additional spectrum to the extent of 1.8
B MHz (paired) beyond 6.2 MHz in 1800 MHz band might be
released on case to case co-ordination basis to the Operators
by charging additional 1% of revenue after customer base of
4-5 lacs was reached. On this note, Mr. Shyamal Ghosh agreed
to the reduced subscriber base from 9 lacs to 4/5 lacs for
c allocation of additional spectrum and recommended to allocate
additional spectrum beyond 6.2 MHz upto 10 MHz by charging
only additional 1% of AGR. This note was approved by the then
Minister of Communications and Information Technology on the
same day i.e. 31.01.2002 itself. It resulted in issuance and
circulation of General Order on 01.02.2002 to all Cellular Mobile
0
Telecom Service (CMTS) Operators. As per the allegations in
the FIR, the accused public servants entered into a criminal
conspiracy with the accused beneficiary companies in taking
the aforesaid decision which caused undue cumulative
E pecuniary advantage of Rs.846.44 crores to the beneficiary
companies and corresponding loss to the Government
Exchequer, by charging an additional 1% AGR only for allotting
additional spectrum from 6.2 MHz upto 10 MHz (paired) instead
of charging 2% AGR, as per the existing norms.
F 10. Thus, the allegation, in nutshell, is for grant of additional
spectrum by lowering the condition of 9 lacs subscribers to 41
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
G 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. The decision was
taken in haste on 31st January, 2002 itself inasmuch as note
was prepared by Mr. J.R. Gupta on that day which was agreed
H to by Mr. Shyamal Ghosh and thereafter approved by the
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 391
INVESTIGATION [A.K. SIKRI, J.]
Minister on the same day. On that basis, circular was issued A
on the very next day i.e. on 01.02.2002. As per the charge-
sheet, investigation has also revealed that all this was done in
haste to help M/s Bharti Cellular Limited which had come out
with Initial Public Offer (IPO) that was opened and it was not
getting good response from the public as it had remained B
under-subscribed. The moment such a decision of allocating
additional spectrum was taken on 31.01.2002, on the very next
day, the issue got over-subscribed.
11. It would be pertinent to mention that in the charge-sheet C
filed, Mr.J.R. Gupta was not made accused as no material of
any conspiracy or being a part of decision is attributed to him.
In this charge-sheet, CBI named Mr. Shyamal Ghosh and the
aforesaid three companies namely M/s Bharti Cellular Limited,
M/s Hutchison Max Telecom (P) Limited and Mis Sterling
Cellular Limited as the accused persons in respect of offences D
under Section 13(2) read with 13(1 )(d) of the PC Act and allied
offences.
The Impugned Order
E
12. The matter was taken up by the Special Judge on 19th
March, 2013 for the purposes of issuance of summons to the
accused persons in the said charge-sheet (CC No.101 /12).
The learned 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 F
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, G
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
H
392 SUPREME COURT REPORTS [2015] 1 S.C.R.
A 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
B issue summons not only to the four accused named in the
charge-sheet but the aforesaid three persons as well.
13. Two of the aforesaid three persons are before us in
these appeals. Feeling aggrieved, they have challenged the
order insofar as it proceeds to implicate them as accused
C persons in the said charge-sheet.
14. Before proceeding to record the submissions of the
learned counsel for the appellants as well as the counsel
opposite, it becomes necessary to take note of the brief order
D dated 19th March, 2013, as this order was read and re-read
time and again by each counsel with an attempt to give their
own interpretation to the same. Therefore, we deem it apposite
to reproduce the said order in its entirety as it would facilitate
understanding the arguments of counsel on either side, with
E more clarity. The impugned order dated 19th March, 2003
reads as under:
"I have heard the arguments at the bar and have carefully
gone through the file and relevant case law.
F 2. It is submitted by the learned PP that accused
Shyamal Ghosh was a public servant, who has since
retired. It is further submitted that remaining three accused
are companies, namely M/s Bharti Cellular Limited, M/s
Hutchison Max Telecom (P) Limited and M/s Sterling
G Cellular Limited. It is further submitted that there is enough
incriminating material on record against the accused
persons and, as such, they may be proceeded against, as
per law.
3. I have carefully gone through the copy of FIR,
H
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 393
INVESTIGATION [A.K. SIKRI, J.]
chargesheet, statement of witnesses and documents on A
record. On the perusal of the record, I am satisfied that
there is enough incriminating material on record to proceed
against the accused persons.
4. I also find at the relevant time, Sh. Sunil Bharti Mittal B
was Chairman-cum-Managing Director of Bharti Cellular
Limited, Sh. Asim Ghosh was Managing Director of
Hutchison Max Telecom (P) Limited and Sh. Ravi Ruia was
a Director in Sterling Cellular Limited, who used to chair
the meetings of its board. In that capacity, they were/are,
prima facie, in control of affairs of the respective C
companies. As such, they represent the directing mind and
will of each company and their state of mind is the state of
mind of the companies. They are/were "alter ego" of their
respective companies. In this fact situation, the acts of the
companies are to be attributed and imputed to them. D
Consequently, I find enough material on record to proceed
against them also.
5. Accordingly, I take cognizance of the case. Issue
summons to all seven accused for 11.04.2013." E
15. It will also be pertinent to mention that the appellants
were not implicated as accused persons in the charge-sheet.
As discussed in some details at the appropriate stage, Mr.
iviiltal was interrogated butfi11 the opinion of CBI, no case was
made out against him. Mr.1Ravi Ruia was not even summoned F
during investigation.
The Arguments : Appellants
16. M/s Harish Salve and Fali Nariman, learned senior G
counsel, argued the case on behalf of the appellant Sunil Bharti
Mittal in an attempt to take him out of the clutches of the
impugned order. Mr.K.V. Viswanathan, learned senior counsel,
led the attack to the said order on behalf of the appellant Ravi
Ruia. Their onslaught was tried to be blunted by Mr. K.K. H
394 SUPREME COURT REPORTS (2015] 1 S.C.R.
A Venugopal, learned senior counsel appearing for the CBI.
Challenge of the appellants was also sought to be thwarted by
Mr. Prashant Bhushan, learned counsel appearing for CPIL,
and Mr. Sunil Malhotra, counsel who argued on behalf of
Telecom Watchdog, which has filed the appeal arising out of
B SLP (Crl.) Nos.3326-3327/2013 challenging another order of
the even date namely 19th March, 2013 passed by the Special
Judge whereby protest application filed by this appellant has
been dismissed.
17. Leading the attack from the front, Mr. Harish Salve
C opened his submission by arguing that the impugned order was
in two parts. Paras 1 to 3 pertain to the charge-sheet which was
filed by the CBI naming four accused persons namely, Mr.
Shyamal Ghosh and the three Cellular Companies. This fact is
noted in para 2. He pointed out that in respect of these four
D accused persons named in the charge-sheet, after going
through the copy of the FIR, charge-sheet, statement of
witnesses and documents on record, the learned Judge was
satisfied that there was enough incriminating material on record
to proceed against them. However, in the second part of the
E order, which was contained in para 4, the Court also found that
the three persons (including the two appellants) were, prima
facie, controlling the affairs of the said three companies and,
therefore, they represented the directing mind and will of each
company. On that basis, these three persons are treated as
F "alter ego" of their respective companies and in the opinion of
the learned Special Judge, the acts of the companies are "to
be attributed and imputed to them''. That was the reason given
by the Special Judge finding enough material to proceed
against them also which resulted in issuing of summons against
G these three persons including the appellant.
18. The neat submission of Mr. Salve was that the
aforesaid reason given by the learned Special Judge was
clearly erroneous in law. Expanding this argument, he submitted
that principle of "alter ego" has always been applied in reverse,
H
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 395
INVESTIGATION [A.K. SIKRI, J.]
inasmuch as general principle is that the acts of individual, who A
is in control of the affairs of a company and is a directing mind,
are attributed to the company, inasmuch as whenever such a
person, who is controlling the affairs of the company, is made
an accused, on the application of the principle of "alter ego",
the company can also be implicated as accused person. It is B
on the well recognised principle that company does not act of
its own but through its Directors/Officers and when such
Directors/Officers act on behalf of the company, the company
is also held liable for those acts on the application of "principal
- agent" principle. He submitted that it has never been a case c
where for the act of the company, an individual is made
accused, unless there is a categorical provision in the statute
making such a person vicariously liable or there is enough
material to attribute the alleged acts of criminality to the said
person. For his aforesaid submissions, he placed heavy
D
reliance upon the decision of this Court in Iridium India
Telecom Ltd. v. Motorola lnc2. He further submitted that merely
on the basis of the appellant's status in the company, it could
not be presumed that it is the appellant who became a party
to the alleged conspiracy, as was held in Maharashtra State
E
Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd3. in the
following manner:
"27. A bare perusal of the complaint shows that the
gravamen of the allegation is that a fabricated document
containing the offending endorsement was tendered in F
evidence before the Arbitral Tribunal on behalf of MSEB
by Accused 6, who was in charge of Shirpur Section. It is
evident from the aforeextracted paragraphs of the
complaint that other accused have been named in the
complaint because, according to the complainant, MSEB, G
Accused 1 was acting under their control and
management. It bears repetition that the only averment
2. (2011) 1 sec 74.
3. (2010) 10 sec 479. H
396 SUPREME COURT REPORTS [2015] 1 S.C.R.
A made against Appellant 2 is that Appellant 1 i.e. MSEB
was acting under the control and management of Appellant
2 along with other three accused. There is no denying the
fact that Appellant 2 happened to be the Chairman of
MSEB at the relevant time but it is a settled proposition
B of law that one cannot draw a presumption that a Chairman
of a company is responsible for all acts committed by or
on behalf of the company. In the entire body of the
complaint there is no allegation that Appellant 2 had
personally participated in the arbitration proceedings or
c was monitoring them in his capacity as the Chairman of
MSES and it was at his instance that the subject
interpolation was made in Ext. C-64.
xx xx xx
D 29. In this regard, it would be useful to advert to the
observations made by a three-Judge Bench of this Court
in S.M.S. Pharmaceuticals (2005)8 SCC 89: (SCC p. 98,
para 8)
"8 .... There is no universal rule that a Director of a
E
company is in charge of its everyday affairs. We
have discussed about the position of a Director in
a company in order to illustrate the point that there
is no magic as such in a particular word, be it
Director, manager or secretary. It all depends upon
F the respective roles assigned to the officers in a
company. A company may have managers or
secretaries for different departments, which means,
it may have more than one manager or secretary."
G Mr. Salve also referred to the following observations in S.K.
Alagh v. State of U.P4.:
12. The short question which arises for consideration is
H 4. (2ooai 5 sec 662.
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 397
INVESTIGATION [A.K. SIKRI, J.]
as to whether the complaint petition, even if given face
A
value and taken to be correct in its entirety, disclosed an
offence as against the appellant under Section 406 of the
Penal Code.
xx xx xx B
19. As, admittedly, drafts were drawn in the name of the
Company, even if the appellant was its Managing Director,
he cannot be said to have committed an offence under
Section 406 of the Penal Code. If and when a statute
contemplates creation of such a legal fiction, it provides
c
specifically therefor. In absence of any provision laid down
under the statute, a Director of a Company or an employee
cannot be held to be vicariously liable for any offence
committed by the Company itself. (See Sabitha
Ramamurthy v. R.B.S. Channabasavaradhya, (2006) 10 D
sec 581."
Reliance was also placed on the decision in the case of
Aneeta Hada v. Godfather Travels & ·Tours (P) Ltd. 5 , with
particular emphasis on the following passage: E
"32. We have referred to the aforesaid authorities to
highlight that the company can have criminal liability and
further, if a group of persons that guide the business of the
companies have the criminal intent, that would be imputed
F
to the body corporate. In this backdrop, Section 141 of the
Act has to be understood. The said provision clearly
stipulates that when a person which is a company commits
an offence, then certain categories of persons in charge
as well as the company would be deemed to be liable for
the offences under Section 138. Thus, the statutory G
intendment is absolutely plain. As is perceptible, the
provision makes the functionaries and the companies to
s. (2012) s sec 661 H
398 SUPREME COURT REPORTS [2015] 1 S.C.R.
A be liable and that is by deeming fiction. A deeming fiction
has its own signification."
19. In addition to the above, another submission of Mr.
Salve was that in the present case, role of the appellant was
B specifically looked into and investigated by the CBI and an
opinion was formed that there was no material to implicate him.
Since the appellant was consciously omitted from the array of
the accused persons after thorough discussions and
deliberations by the investigating agericy at the appropriate
C level, and it was specifically so stated in the charge-sheet itself,
in a situation like this even if the learned Judge wanted to differ
from the investigating agency and decided to take cognizance
against the appellant, he should have given valid reasons for
proceeding against the appellant which could include his
opinion that there was sufficient material against the appellant
D to be proceeded against. However, reasons given in the
impugned order, according to the learned senior counsel, are
totally extraneous amounting to wrong approach in law.
20. His further submission was that even at a later stage
E if any evidence surfaces against the appellant, the Court is not
powerless as any person can be summoned as accused under
Section 319 of the Code at any stage of the trial.
21. Mr. Viswanathan who appeared for the appellant Mr.
Ravi Ruia, while adopting the aforesaid arguments and
F reiterating them briefly, tried to canvass another feature peculiar
to in the case of his client Mr. Ravi Ruia. The learned counsel
pointed out that he was not even called for interrogation by the
CBI which would show that there is no material against him at
all. His name is not even mentioned in the charge-sheet. He
G painstakingly pleaded that in the absence of any material
reflected even in the charge-sheet, this appellant would be
handicapped in making any submission for his discharge at the
stage of framing charges. As the appellant was implicated
involving the principle of vicarious liability, which is not
H applicable and erroneously referred to, he had no option but
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 399
INVESTIGATION [AK. SIKRI, J.]
to file the present appeal for quashing of the notice of A
cognizance against him. Mr. Viswanathan in support of his
submission referred certain judgments, which we shall discuss
at the appropriate stage.
The Arguments: Respondents
B
22. Mr. K. K. Venugopal, learned senior counsel appearing
for the CBI, refuted the aforesaid submissions in strongest
possible manner. He referred to the various portions of the
charge-sheet where allegations against the accused persons
are stated and outcome of the investigation revealed. His C
endeavour was to demonstrate the manner in which the
decision was taken, resulting into huge loss to the Government
Exchequer and, prima facie, it was established that such a
decision was taken to help the accused Telecom Companies.
He argued that once the companies are charged with mens o
rea offences, they require guilty mind as these are not strict
liability offences. However, the companies would act through
their Directors/Officers only and the mens rea/guilty .mind would
be of those persons who are controlling the affairs of the
companies. He referred to the counter affidavit filed by the CBI E
which, in summary form, mentions the role of different persons
including the manner in which note was put up by Mr. J.R. Gupta;
the changes that were made by Mr. Shyamal Ghosh to the said
note allegedly to benefit the companies; and the manner in
which it was approved by the Minister. This affidavit also
F
mentions that there is evidence on record to show that the
appellant Mr. Sunil Mittal had met late Shri Pramod Mahajan
during 2001-2002 for getting allocated additional spectrum
beyond 6.2 MHz for tele-service area of his company. There
was also evidence of meetings between the appellant and Mr.
Shyamal Ghosh for the same purpose during the same period G
which would constitute the circumstantial evidence to implicate
these persons. The thrust of his submission, thus, is that it is
the "human agency" in the accused companies who was
responsible as it was a mens rea offence and such an agency/
H
400 SUPREME COURT REPORTS [2015] 1 S.C.R.
A person has tb be the tbp person, going by the circumstantial
evidence. Therefore, even if in the charge-sheet, names of these
appellants were not included, the Special Judge was within his
powers to look into the matter in its entirety as the charge-sheet
along with documents spanning over 25000 pages was
B submitted to him.
23. Mr. Venugopal joined issue on the interpretation given
by the appellants to the impugned order. According to him, the
order could not be bifurcated into two parts. Para 3 of the order
wherein the Special Judge has observed that he had perused
C the Fl R, charge-sheet, statement of witnesses and documents
on record was relatable to the three individuals, including the
two appellants as well. He even submitted that in the absence
of individual accused persons, who were in charge of the affairs
of the three accused companies, it may become difficult to
D proceed against the accused companies alone as it was a
mens rea offence. He also relied upon the following judgments
to support the impugned order, with the plea that the trial court
was invested with requisite powers to summon the appellants:
1. M. C. Mehta (Taj Corridor scam) v. Union of lndia6
E
"30. At the outset, we may state that this Court has
repeatedly emphasised in the above judgments that in
Supreme Court monitored cases this Court is concerned
with ensuring proper and honest performance of its duty
F by CBI and that this Court is not concerned with the merits
of the accusations in investigation, which are to be
determined at the trial on the filing of the charge-sheet in
the competent court, according to the ordinary procedure
prescribed by law. Therefore, the question which we have
G to decide in the present case is whether the administrative
hierarchy of officers in CBI, in the present case, have
performed their duties in a proper and honest manner."
H e. (2007) 1 sec 11 o.
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 401
INVESTIGATION [A.K. SIKRI, J.]
A
2. Kishun Singh v. State of Bihai'
"13. The question then is whether de hors Section 319 of
the Code, can similar power be traced to any other
provision in the Code or can such power be implied from
the scheme of the Code? We have already pointed out B
earlier the two alternative modes in which the Criminal Law
can be set in motion; by the filing of information with the
police under Section 154 of the Code or upon receipt of
a complaint or information by a Magistrate. The former
would lead to investigation by the police and may culminate c
in a police report under Section 173 of the Code on the
basis whereof cognizance may be taken by the Magistrate
under Section 190(1 )(b) of the Code. In the latter case, the
Magistrate may either order investigation by the police
under Section 156(3) of the Code or himself hold an inquiry D
under Section 202 before taking cognizance of the offence
under Section 190(1 )(a) or (c), as the case may be, read
with Section 204 of the Code .. Once the Magistrate takes
cognizance of the offence he may proceed to try the
offender (except where the case is transferred under
E
Section 191) or commit him for trial under Section 209 of
the Code if the offence is triable exclusively by a Court of
Session. As pointed out earlier cognizance is taken of the
offence and not the offender. This Court in Raqhubans
Dubev v. State of Bihar-(1967) 2 SCR 423stated that once
cognizance of an offence is taken it becomes the Court's
F
duty 'to find out who the offenders really are' and if the
Court finds 'that apart from the persons sent up by the
police some other persons are involved. it is its duty to
proceed against those persons' by summoning them
because 'the summoning of the additional accused is part G
of the proceeding initiated by its taking cognizance of an
offence'. Even after the present Code came into force, the
7. (1993) 2 sec 16. H
402 SUPREME COURT REPORTS [2015] 1 S.C.R.
A legal position has not undergone a change; on the contrary
the ratio of Dubey case was affirmed in Hareram Satpathy
v. Tikaram Agarwala. (1978) 4 SCC 58 Thus far there is
no difficulty.
3. Dharam Pal v. State of Haryana 6
B
"40. In that view of the matter, we have no hesitation in
agreeing with the views expressed in Kishun Singh case
(1993) 2 SCC 16 that the Sessions Court has jurisdiction
on committal of a case to it, to take cognizance of the
c offences of the persons not named as offenders but whose
complicity in the case would be evident from the materials
available on record. Hence, even without recording
evidence, upon committal under Section 209, the Sessions
Judge may summon those persons shown in column 2 of
D the police report to stand trial along with those already
named therein.
41. We are also unable to accept Mr Dave's submission
that the Sessions Court would have no alternative. but to
wait till the stage under Section 319 CrPC was reached.
E
before proceeding against the persons against whom a
prima facie case was made out from the materials
contained in the case papers sent by the learned
Magistrate while committing the case to the Court of
Session."
F
24. He also referred to the decision in the case of Lee Kun
Hee, President9, Samsung Corpn., South Korea v. State of
Uttar Pradesh wherein this Court has set down the limits of
High Court's power under Section 482 of the Code to interfere
G with summoning orders passe{:I by the trial court, as follows:
"10. JCE Consultancy filed a criminal complaint (Complaint
a. (2014) 3 sec 36.
H 9. (2012) 3 sec 132.
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 403
INVESTIGATION [A.K. SIKRI, J.]
No. 30 of 2005) under Sections 403, 405, 415, 418, 420 A
and 423 read with Sections 120-B and 34 of the Penal
Code, 1860 before the VI Ith Additional Chief Judicial
Magistrate, Ghaziabad. In the complaint filed by Shaikh
Allauddin Pakir Maiddin, the sole proprietor of JCE
Consultancy, Samsung, Dubai, was impleaded as B
Accused 1 (Appellant 5 herein); Byung Woo Lee,
Managing Director of Samsung, Dubai, was impleaded as
Accused 2 (Appellant 3 herein); Lee Kun Hee, President,
Samsung Corporation, was impleaded as Accused 3
(Appellant 1 herein); Yon Jung Yung, Vice-President and c
Chief Executive Officer, Samsung Corporation, was
impleaded as Accused 4 (Appellant 2 herein); Dong Kwon
Byon, ex-Managing Director, Samsung, Dubai, was
impleaded as Accused 5 (Appellant 4 herein); S.C. Baek,
ex-Financial Advisor, Samsung, Dubai, was impleaded as D
Accused 6; Sky lmpex Ltd. was impleaded as Accused
7; and the Chairman of Sky lmpex Ltd. was impleaded as
Accused 8.
xx xx xx
E
· 21. In order to support the aforesaid primary contention, it
was also emphasised, that Appellants 1 to 4 are all foreign
citizens, whereas, Appellant 5 is a foreign company
incorporated in Dubai. Appellant 1, we are told, was
Chairman and Director of Samsung, South Korea. It is F
contended that he has had nothing to do with Samsung,
Dubai. We are informed that he lives in South Korea.
Appellant 2, we are informed, was a former Vice-Chairman
and CEO of Samsung, South Korea. He also has had
nothing to do with Samsung, Dubai. He too lives in South G
Korea.
xx xx xx
54. The fourth contention advanced at the hands of the
learned counsel for the appellants was aimed at H
404 SUPREME COURT REPORTS [2015] 1 S.C.R.
A demonstrating; firstly, that the charges, as have been
depicted in the summoning order, were not made out;
secondly, that the appellants herein were functionaries of
a company, and therefore, per se could not be made
vicariously liable for offences emerging out of actions
B allegedly taken in furtherance of the discharge of their
responsibilities towards the company; and thirdly, that none
of the appellants had any concern whatsoever (even as
functionaries of the company concerned), with the
allegations levelled by the complainant.
c xx xx xx
57. In paras 24 to 30, this Court in Iridium India Telecom
Ltd. case-(2011) 1 sec 74 noticed the facts pertaining to
the controversy, and the emerging legal technicalities
D canvassed at the hands of the appellants. In paras 31 to
37, this Court recorded the response thereto, at the behest
of the accused. Thereupon, this Court in Iridium India
Telecom Ltd. case made the following observations in
para 38: (SCC p. 89) "38. We have considered the
E submissions made by the learned Senior Counsel. A bare
perusal of the submissions would be sufficient to amply
demonstrate that this cannot be said to be an 'open and
shut' case for either of the parties. There is much to be
said on bolt) sidei:JThe entire scenario painted by both
the sides is circumscribed by 'ifs' and 'buts'. A mere
F
reading of the 1992 PPM would not be sufficient to
conclude that the entire information has been given to the
prospective investors. Similarly, merely because there may
have been some gaps in the information provided in the
PPM would not be sufficient to conclude that the
G respondents have ry,ade deliberate misrepresentations. In
such circumstances, we have to examine whether it was
appropriate for the High Court to exercise its jurisdiction
under Section 482 CrPC to quash the proceedings at the
stage when the Magistrate had merely issued process
H -~-
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 405
INVESTIGATION [AK. SIKRI, J.]
against the respondents." A
xx xx xx
59. While dealing with the various judgments rendered by
this Court on the subject reference was also made to the
decision in MN. Ojha v. Alok Kumar Srivastav-(2009) 9 B
sec 682 . In MN. Ojha case similar views as in Bhajan
Lal case-1992 Supp (1) sec 335 came to be recorded
in the following words: (MN. Ojha case, sec pp. 686-88,
paras 25 & 27-30) .
c
"25. Had the learned SDJM applied his mind to the
facts and circumstances anq sequence of events
and as well as the documents filed by the
complainant himself along with the complaint, surely
he would have dismissed the complaint. He would o
have realised. that the complaint was only a
counterblast to the FIR lodged by the Bank against
the complainant and others with regard to the same
transaction.
xx xx xx E
•
27. The case on hand is a classic illustration of non-
application of mind by the learned Magistrate. The
learned Magistrate did not scrutinise even the
contents of the complaint, leave aside the material F
documents available on record. The learned
Magistrate truly was a silent spectator at the time
of recording of preliminary evidence before
summoning the appellants.
G
xx xx xx
28. The High Court committed a manifest error in
disposing of the petition filed by the appellants
under Section 482 of the Code without even
H
406 SUPREME COURT REPORTS [2015] 1 S.C.R.
A adverting to the basic facts which were placed
before it for its consideration.
29. It is true that the Court in exercise of its
jurisdiction under Section 482 of the Code of
Criminal Procedure cannot go into the truth or
B
otherwise of the allegations and appreciate the
evidence if any available on record. Normally, the
High Court would not intervene in the criminal
proceedings at the preliminary stage/when the
c investigation/enquiry is pending.
30. Interference by the High Court in exercise of its
jurisdiction under Section 482 of the Code of
Criminal Procedure can only be where a clear case
for such interference is made out. Frequent and
D uncalled for interference even at the preliminary
stage by the High Court may result in causing
obstruction in the progress of the inquiry in a
criminal case which may not be in the public
interest. But at the same time the High Court cannot
E
refuse to exercise its jurisdiction if the interest of
justice so required where the allegations made in
the FIR or complaint are so absurd and inherently
improbable on the basis of which no fair-minded
F and informed observer can ever reach a just and
proper conclusion as to the existence of sufficient
grounds for proceeding. In such cases refusal to
exercise the jurisdiction may equally result in
injustice more particularly in cases where the
G complainant sets the criminal law in motion with a
view to exert pressure and harass the persons
arrayed as accused in the complaint."
63. As of now we are satisfied, that the factual foundation/
background of the acts of omission and commission
H
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 407
INVESTIGATION [A.K. SIKRI, J.]
presented by the complainant is specific and categorical. A
We are also satisfied that the allegations levelled by the
complainant, fully incorporate all the basic facts which are
necessary to make out the offences whereunder the
impugned summoning order dated 12-1-2005 has been
passed. The instant controversy does not suffer from any B
of the impairments referred in Iridium India Telecom Ltd.
case. ·Accordingly, we leave i\ open to the appellants to
canvass the legal issues, as ~ere canvassed before us,
before the trial court. After the ~ival parties have led their
evidence the trial court will return its finding thereon in c
accordance with law without being influenced by any
observations made on the merits of the controversy
hereinabove, or hereafter.
xx xx xx
D
71. It was also the contention of the learned counsel for
the respondents, that the civil liability, in the instant case,
was raised as against the eventual purchaser of the goods/
product (Samsung, Dubai}, in lieu of the goods/product
supplied by the complainant JCE Consultancy, which had E
passed onto the purchasers under the agreement dated
1-12-2001. Accordingly, the civil liability was only raised
as against Samsung, Dubai. However, insofar as the
criminal liability is concerned, Samsung, Dubai being one
of the subsidiary companies of Samsung, South Korea, it
F
was allegedly under the overall control exercised by
Samsung, South Korea. Samsung, South Korea, according
to the complainant, was instrumental in the eventual
decision taken by Samsung, Dubai to deny the passing
of the reciprocal monetary consideration for the goods
supplied under the agreement dated 1-12-2001. This,
G
according to the respondents, has been the categorical
stance of JCE Consultancy in the criminal complaint, as
also, in the pre-summoning evidence recorded before the
Vllth Additional Chief Judicial Magistrate, Ghaziabad under
H
408/ SUPREME COURT REPORTS [2015] 1 S.C.R.
A Section 200 of the Code of Criminal Procedure.
72. These allegations made by JCE Consultancy, are
supported by documents furnished to the summoning
court. The aforesaid factual position has also been
endorsed by Sky lmpex Ltd. before this Court. According
B
to the learned counsel for the respondents, the culpability
of the appellants before this Court, in a series of similar
actions, clearly emerges even from documents placed on
record of the instant case by Sky lmpex Ltd. As such, it is
submitted, that the respondents have per se repudiated all.
c the submissions advanced on behalf of the appellant,
obviously subject to the evidence which rival parties will be
at liberty to adduce before the trial court.
xx xx xx
D
74. It would not be appropriate for us to delve into the
culpability of the appellants at the present juncture on the
basis of the factual position projected by the rival parties
before us. The culpability (if at all) would emerge only after
evidence is adduced by the rival parties before the trial
E
court. The only conclusion that needs to be drawn at the
present juncture is that even on the basis of the last
submission canvassed on behalf of the appellants it is not
possible to quash the summoning order at this stage. In
the aforesaid view of the matter, it is left open to the
F
appellants to raise their objections, if they are so advised,
before the trial court. The trial court shall, as it ought to,
adjudicate upon the same in consonance with law after
allowing the rival parties to lead evidence to substantiate
their respective positions."
G
25. He concluded his submission by reiterating that when
it was a case of circumstantial evidence which appeared on
record in abundance, the trial court was right in summoning the
appellants and in fact, judgment in Keshav Mahindra v. State
H
•
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 409
INVESTIGATION [A.K. SIKRI, J.]
of M.P1°. fully supported the impugned order. On the other hand, A
decision in Iridium India Telecom Ltd. (supra) had no
application to the facts of this case.
26. Mr. Prashant Bhushan, appearing for intervenor,
highlighted the role of the appellant Mr. Sunil Bharti Mittal from 8
the records and particularly the extract of file noting which inter
alia contained the views of the Superintendent of Police. He,
thus, submitted that this constituted sufficient material to
proceed against him and since it was only a summoning order,
the appellants were free to seek discharge before the trial court. C
Submissions of Mr. Sunil Malhotra, Advocate, were also on the
same lines.
The Arguments: Appellants' Rejonder
27. Mr. Fali Nariman argued in rejoinder on the lines o
submissions were made by Mr. Salve, and in the process
lucidly expanded those submissions. Emphasising that position
in law with regard to vicarious liability was that there is no such
vicarious liability in criminal law unless something is imputed
or there is a specific statutory provision creating criminal E
vicarious liability. He pointed out that in para 4 of the impugned
order, the learned Special Judge has not gone into the facts
but did so taking shelter under a legal cover, but went wrong in
applying an ex facie incorrect non- existing legal principle.
0,1,1r Analysis of the Subject Matter F
28. We have given our serious consideration to all the
submissions made before us and fully conscious of the
importance of the matter as well. At the outset, we would like
to point out that detailed submissions were made on the nature G
of the charges, and in the process, learned counsel for the
appellants tried to trivialize the matter by stating that what was
decided was only a policy decision of the Government to
10. (1996) s sec 129. H
410 SUPREME COURT REPORTS [2015] 1 S.C.R.
A allocate additional spectrum by charging 1% additional AGR
i.e. from 4% to 5%; benefit thereof was extended to all Cellular
Operating Companies including Pubic Sector Companies like
MTNL and BSNL etc. and, therefore, there cannot be a criminal
intent behind it. Mr. Salve as well as Mr. Nariman took pains in
B showing various portions of the counter affidavit filed by the CBI •
to show that the appellant was left out and not made accused
after due deliberations and argued that it was not a case of
erroneous omission by CBI. It was also argued at length that
the allegations were in the domain of the policy decision taken
c by the Government to charge 4% of AGR whereas it was
realised much later in the year 2010 when the TRAI has passed
orders that it should have been 5% AGR. According to them, it
was merely a bona fide policy decision which could not be
subject matter of criminal proceedings, in the absence of intent
of criminality therein. More so, when benefit of the said decision
0
was not confined to the appellant's company, namely Mis Bharti
Cellular Limited, but was extended to all others as well including
public sector telecom companies like MTNL and BSNL.
Therefore, there cannot be a criminal intent behind such a
E decision. Mr. K.K. Venugopal and others, appearing for the
other side, had tried to demonstrate that the aforesaid
submission of the learned counsel for the appellant was totally
erroneous and contrary to records. He tried to project that it was
a conspiracy of major level with sole intention to benefit the
accused companies at the cost of the public exch~quer and for
F this purpose, criminal conspiracy was hatched up between
them. However, we make it clear at this juncture itself that this
part of the submission is beyond the scope of the present
appeals inasmuch as even according to the learned counsel
for the appellants that the aforesaid is not made the basis of
G the order while implicating the appellants herein. Insofar as four
persons who were made accused in the charge-sheet by the
CBI is .concerned, they are concededly not before us as their
summoning order has not been challenged. Therefore, we deem
it unnecessary to go into this question, which position was even
H
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 411
INVESTIGATION [A.K. SIKRI, J.]
conceded by all the counsel appearing before us. A
29. The fulcrum of the issue before us is the validity of that
part of impugned order vide which the two appellants who were
not named in the charge sheet, have been summoned by the
Special Judge, for the reasons given therein. B
(i) Dissecting the Impugned Order:
30. In the first instance, we make it clear that there is no
denying the legal position that even when a person is not
named in the charge sheet as an accused person, the trial court C
has adequate powers to summon such a non-named person
as well, if the trial court finds that the charge sheet and the
documents/material placed along with the charge-sheet
disclose sufficient prima facie material to proceed against such
a person as well. Kishun Singh (supra) and Dharam Pal D
(supra) are the direct decisions on this aspect. However, in the
present case, the question is not as to whether there is sufficient
material against the appellants filed in the trial court to proceed
against them. Whether such a material is there or not is not
reflected from the impugned order as that aspect is not even E
gone into. The learned Special Judge has not stated in the
order that after examining the relevant documents, including
statement of witnesses, he is satisfied that there is sufficient
incriminating material on record to proceed against the
appellants as well. On reading of the impugned order which is
F
already extracted verbatim, it is very clear that in para 2 of the
order, the learned Special Judge discusses the submissions
of the Public Prosecutor in respect of the persons who are
made accused in the charge-sheet. Insofar as charge-sheet is
concerned, it has named Mr. Shyamal Ghosh, who was the
public servant and other three accused persons are the G
corporate entities. Submission of the learned Public Prosecutor
is recorded in this para that there is enough incriminating
material on record against them and they be proceeded against,
as per law. Immediately thereafter in para 3, the learned
H
412 SUPREME COURT REPORTS [2015] 1 S.C.R.
A Special Judge records his satisfaction on the perusal of the
records namely FIR, charge-sheet, statement of witnesses and
documents and states that he is satisfied that there is enough
incriminating material on record to proceed against the
"accused persons". Para 3 is clearly relatable to para 2. Here,
B the "accused persons:· referred to are those four persons whose
names are mentioned in para 2. Obviously, till that stage,
appellants were not the accused persons as they are not
named as such in the charge-sheet. After recording his
satisfaction qua the four said accused persons, discussion
c about other.three individuals (including the two appellants) starts
from para 4 where the Special Judge "also" finds and refers to
the positions which these three persons hold/held in the three
companies respectively. In para 4, the learned Special Judge
does not mention about any incriminating material against them
in the statement of witnesses or documents etc. On the other
0
h~nd, the reason for summoning these persons and proceeding
against them are specifically ascribed in this para which, prima
facie, are:
(i) These persons were/are in the control of affairs
E of the respective companies.
(ii) Because of their controlling position, they
represent the directing mind and will of each
company.
F (iii) State of mind of these persons is the state of
mind of the companies. Thus, they are described
as "alter ego" of their respective companies.
31. It is on this basis alone that the Special Judge records
G that "in this fact situation, the acts of companies are to be
attributed and imputed to them".
(ii) Principle of "alter ego", as applied
32. The moot question is whether the aforesaid
H
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 413
INVESTIGATION (A.K. SIKRI, J.]
proposition, to proceed against the appellants is backed by A
law? In order to find the answer, let us scan through the case
law that was cited during the arguments.
33. First case which needs to be discussed is Iridium
India (supra). Before we discuss the facts of this case, it would B
be relevant to point out that the question as to whether a
company could be prosecuted for an offence which requires
mens rea had been earlier referred to in a Constitution Bench
of five Judges in the case of Standard Chartered Bank v.
Directorate of Enforcement11 • The Constitution Bench had held
that a company can be prosecuted and convicted for an offence
c
which requires a minimum sentence of imprisonment. In para
8 of the judgment, the Constitution Bench clarified that the
Bench is not expressing any opinion on the question whether
a corporation could be attributed with requisite mens rea to
prove the guilt. Para 8 reads as under: D
"8. It is only in a case requiring mens rea, a question arises
whether a corporation could be attributed with requisite
mens rea to prove the guilt. But as we are not concerned
with this question in these proceedings, we do not express E
any opinion on that issue."
34. In Iridium India (supra), the aforesaid question fell
directly for consideration, namely, whether a company could be
prosecuted for an offence which requires mens rea and
discussed this aspect at length, taking note of the law that
F
prevails in America and England on this issue. For our benefit,
we will reproduce paras 59, 60, 61, 62, 63 and 64 herein:
"59. The courts in England have emphatically rejected the
notion that a body corporate could not commit a criminal G
offence which was an outcome of an act of will needing a
particular state of mind. The aforesaid notion has been
rejected by adopting the doctrine of attribution and
11. (2005J 4 sec 530. H.
414 SUPREME COURT REPORTS [2015] 1 S.C.R.
A imputation. In other words, the criminal intent of the "alter
ego" of the company/body corporate i.e. the person or
group of persons that guide the business of the company,
would be imputed to the corporation.
60. It may be appropriate at this stage to notice the
B
observations made by MacNaghten, J. in Director of
Public Prosecutions v. Kent and Sussex Contractors Ltd.
1972 AC 153: (AC p. 156):
"A body corporate is a "person" to whom, amongst
c the various attributes it may have, there should be
imputed the attribute of a mind capable of kno_wing
and forming an intention - indeed it is much too
late in the day to suggest the contrary. It can only
know or form an intention through its human agents,
D but circumstances may be such that the knowledge
of the agent must be imputed to the body
corporate. Counsel for the respondents says that,
although a body corporate may be capable of
having an intention, it is not capable of having a
E criminal intention. In this particular case the intention
was the intention to deceive. If, as in this case, the
responsible agent of a body corporate puts
forward a document knowing it to be false and
intending that it should deceive, I apprehend,
F according to the authorities that Viscount
Caldecote, L.C.J., has cited, his knowledge and'
intention must be imputed to the body corporate."
61. The principle has been reiterated by Lord Denning in
Bolton (H.L.) (Engg.) Co. Ltd. v. T.J. Graham & Sons Ltd.
G in the following words: (AC p. 172):
"A company may in many ways be likened to a
human body. They have a brain and a nerve centre
which controls what they do. They also have hands
H which hold the tools and act in accordance with
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 415
INVESTIGATION [A.K. SIKRI, J.]
directions from the centre. Some of the people in A
the company are mere servants and agents who are
nothing more than hands to do tfle work arid cannot
be said to represent the mind or will. Others are
directors and managers who represent the directing
mind and will of the company, and control what they B
do. The state of mind of these managers is the
state of mind of the company and is treated by the
law as such. So you will find that in cases where
the law requires personal fault as a condition of
liability in tort, the fault of the manager will be the c
personal fault of the company. That is made clear
in Lord Haldane's speech in Lennard's Carrying
Co. Ltd. v. Asiatic Petroleum Co. l,.fd. (AC at pp.
713, 714). So also in the criminal law, in cases
where the law requires a guilty mind as a condition 0
of a criminal offence, the guilty mind of the directors
or the managers will render the company
themselves guilty."
62. The aforesaid principle has been firmly established in
England since the decision of the House of Lords in Tesco E
Supermarkets Ltd. v. Nattrass. In stating the principle of
corporate liability for criminal offences, Lord Reid made
the following statement of law: (AC p. 170 E-G)
"I must start by considering the nature of the · F
personality which by a fiction the law attributes to a
corporation. A living person has a mind which can
have knowledge or intention or be negligent and he
has hands to carry out his intentions. A corporation
has none of these: it must act through living persons, G
though not always one or the same person. Then
the person who acts is not speaking or acting for
the company. He is acting as the company and his
mind which directs his acts is the mind of the
company. There is no question of the company
H
416 SUPREME COURT REPORTS [2015] 1 S.C.R.
A being vicariously liable. He is not acting as a
seNant, representative, agent or delegate. He is an
embodiment of the company or, one could say, he
hears and speaks through the persona of the
company, within his appropriate sphere, and his
B mind is the mind of the company. If it is a guilty mind
then that guilt is the guilt of the company. It must be
a question of law whether, once the facts have been
ascertained, a person in doing particular things is
to be regarded as the company or merely as the
c company's seNant or agent. In that case any liability
of the com~any can only be a statutory or vicarious
liability."
63. From the above it becomes evident that a corporation
is virtually in the same position as any individual and may
D be convicted of common law as well as statutory offences
including those requiring mens rea. The criminal liability of
.a corporation would arise when an offence is committed
in relation to the business of the corporation by a person
or body of persons in control of its affairs. In such
E circumstances, it would be necessary to ascertain that the
degree and control of the person or body of persons is so
intense that a corporation may be said to think and act
through the person or the body of persons. The position
of law on this issue in Canada is almost the same. Mens
F rea is attributed to corporations on the principle of "alter
ego" of the company.
64.So far as India is concerned, the legal position has
been clearly stated by the Constitution Bench judgment of
this Court in Standard Chartered Bank v. Directorate of
G
Enforcement-(2005) 4 SCC 530 . On a detailed
consideration of the entire body of ease laws in this country
as well as other jurisdictions, it has been obseNed as
follows: (SCC p. 541, para 6)
H "6. There is no dispute that a company is liable to
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 417
INVESTIGATION [A.K. SIKRI, J.]
be prosecuted and punished for criminal offences. A
Although there are earlier authorities to the effect
that corporations cannot commit a crime, the
generally accepted modern rule is that except for
such crimes as a corporation is held incapable of
committing by reason of the fact that they involve B
personal malicious intent, a corporation may be
subject to indictment or other criminal process,
although the criminal act is committed through its
agents."
35. It is abundantly clear from the above that the principle
c
which is laid down is to the effect that the criminal intent of the
"alter ego" of the company, that is the personal group of
persons that guide the business of the company, would be
imputed to the company/corporation. The legal proposition that
is laid down in the aforesaid judgment is that if the person or D
group of persons who control the affairs of the company commit
an offence with a criminal intent, their criminality can be
imputed to the company as well as they are "alter ego" of the
company.
E
36. In the present case, however, this principle is applied
in an exactly reverse scenario. Here, company is the accused
person and the learned Special Magistrate has observed in the
impugned order that since the appellants represent the directing
mind and will of each company, their state of mind is the state F
of mind of the company and, therefore, on this premise, acts
of the company is attributed and imputed to the appellants. It
is difficult to accept it as the correct principle of law. As
demonstrated hereinafter, this proposition would run contrary
to the principle of vicarious liability detailing the circumstances G
under which a.direction of a company can be held liable.
(iii) Circumstances when Director/Person in charge of
the affairs of the company can also be prosecuted, when
the company is an accused person:
H ,
418 SUPREME COURT REPORTS [2015] 1 S.C.R.
A 37. No doubt, a corporate entity is an artificial person which
acts through its officers, directors, managing director, chairman
etc. If such a company commits an offence involving mens rea,
it would normally be the intent and action of that individual who
would act on behalf of the company. It would be more so, when
B the criminal act is that of conspiracy. However, at the same
time, it is the cardinal principle of criminal jurisprudence that
there is no vicarious liability unless the statute specifically
provides so.
C 38. Thus, an individual who has perpetrated the
commission of an offence on behalf of a company can be made
accused, along with the company, if there is sufficient evidence
of his active role coupled with criminal intent. Second situation
in which he can be implicated is in those cases where the
statutory regime itself attracts the doctrine of vicarious liability,
D by specifically incorporating such a provision.
39. When the company is the offendor, vicarious liability
of the Directors cannot be imputed automatically, in the
absence of any statutory provision to this effect. One such
E example is Section 141 of the Negotiable Instruments Act,
1881. In Aneeta Hada (supra), the Court noted that if a group
of persons that guiqe the business of the company have the
criminal intent, that would be imputed to the body corporate and
it is in this back<lrop, Section 141 of the Negotiable Instruments
F Act has to be understood. Such a position is, therefore,
because of statutory intendment making it a deeming fiction.
Here also, the principle of "alter ego", was applied only in one
direction namely where a group of persons that guide the
business had criminal intent, that is to be imputed to the body
G corporate and not the vice versa. Otherwise, there has to be a
specific act attributed to the Director or any other person
allegedly in control and management of the company, to the
effect that such a person was responsible for the acts
committed by or on behalf of the company. This very principle
H is elaborated in various other judgments. We have already
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 419
INVESTIGATION [A.K. SIKRI, J.]
taken note of Maharashtra State Electricity Distribution Co. A
Ltd. (supra) and S.K. Alagh (supra). Few other judgments
reiterating this principle are the following:
1. Jethsur Surangbhai v. State of Gujarat12
"9. With due respect what the High Court seems to have B
missed is that in a case like this where there was serious
defalcation of the properties of the Sangh, unless the
prosecution proved that there was a close cohesion and
collusion between all the accused which formed the subject
matter of a conspiracy, it would be difficult to prove the dual C
charges particularly against the appellant (A-1 ). The charge of
conspiracy having failed, the most material and integral part of
the prosecution story against the appellant disappears. The only
ground on the basis of which the High Court has convicted him
is that as he was the Chairman of the Managing Committee, D
he must be held to be vicariously liable for any order given or
misappropriation committed by the other accused. The High
Court, however, has not referred to the concept of vicarious
liability but the findings of the High Court seem to indicate that
this was the central idea in the mind of the High Court for E
convicting the appellant. In a criminal case of such a serious
nature mens rea cannot be excluded and once the charge of
conspiracy failed the onus lay on the prosecution to prove
affirmatively that the appellant was directly and personally
connected with acts or omissions pertaining to Items 2. 3 and F
4. It is conceded by Mr Phadke that no such direct evidence is
forthcoming and he tried to argue that as the appellant was
Chairman of the Sangh and used to sign papers and approve
various tenders, even as a matter of routine he should have
acted with care and caution and his negligence would be a
G
positive proof of his intention to commit the offence. We are
however unable to agree with this somewhat broad statement
of the law. In the absence of a charge of conspiracy the mere
fact that the appellant happened to be the Chairman of the
12. (1984) Supp. sec 20?, H
420 SUPREME COURT REPORTS [2015] 1 S.C.R.
A Committee would not make him criminally liable in a vicarious
sense for items 2 to 4. There is no evidence either direct or
circumstantial to show that apart from approving the purchase
of fertilisers he knew that the firms from which the fertilisers
were purchased did not exist. Similar is the case with the other
B two items. Indeed, if the Chairman was to be made liable then
all members of the Committee viz. Tehsildar and other
nominated members, would be equally liable because all of
them participated in the deliberations of the meetings of the
Committee, a conclusion which has not even been suggested
c by the prosecution. As Chairman of the Sangh the appellant had
to deal with a large variety of matters and it would not be
humanly possible for him to analyse and go into the details of
every small matter in order to find out whether there has been
any criminal breach of trust. In fact, the hero of the entire show
seems to be A-3 who had so stage-managed the drama as to
0
shield his guilt and bring the appellant in the forefront. But that
by itself would not be conclusive evidence against the appellant.
There is nothing to show that A-3 had either directly or indirectly
informed the appellant regarding the illegal purchase of
E fertilisers or the missing of the five oil engines which came to
light much later during the course of the audit. Far from proving
the intention the prosecution has failed to prove that the
appellant had any knowledge of defalcation of Items 2 to 4. In
fact, so far as item 3 is concerned, even Mr Phadke conceded
that there is no direct evidence to connect the appellant."
F
2. Sham Sunder v. State of Haryana 13 •
"9. But we are concerned with a criminal liability under
penal provision and not a civil liability. The penal provision must
G be strictly construed in the first place. Secondly, there is no
vicarious liability in criminal law unless the statute takes that
also within its fold. Section 10 does not provide for such liability.
It does not make all the partners liable for the offence whether
they do business or not."
H 13. (1989) 4 sec 630.
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 421
INVESTIGATION [A.K. SIKRI, J.]
3. Hira Lal Hari Lal Bhagwati v. CB/1 4 A
"30. In our view. under the penal law. there is no concept
of vicarious liabilfty unless the said statute covers the same
within its ambit. In .the instant case, the said law which
prevails in the field i.e. the Customs Act, 1962 the B
appellants have been thereinunder wholly discharged and
the GCS granted immunity from prosecution."
4. Maksud Saiyed v. State of Gujarat15
"13. Where a jurisdiction is exercised on a complaint C
petition filed in terms of Section 156(3) or Section 200 of
the Code of Criminal Procedure, the Magistrate is required
to apply his mind. The Penal Code does not contain any
provision for attaching vicarious liability on the part of the
Managing Director orthe Director~f'of the Company when D
the accused is the Company. TheTearn;;d,..Magistrate failed
to pose unto himself the correct qliestion viz. as to whether
the complaint petition, even if given face value and taken
to be correct in its entirety, would lead to the conclusion
that the respondents herein were personally liable for any
E
offence. The Bank is a body corporate. Vicarious liability
of the Managing Director and Director would arise
provided any provision exists in that behalf in the statute.
Statutes indisputably must contain provision fixing such
vicarious liabilities. Even for the said purpose, it is
F
obligatory on the part of the complainant to make requisite
allegations which would attract the provisions constituting
vicarious liability."
5. R. Ka/yani v. Janak C. Mehta 16
G
"32. Allegations contained in the FIR are for commission
of offences under a general statute. A vicarious liability can
14. (2003) 5 sec 257.
15. (2008) 5 sec 668.
16. (2009) 1 sec 516. H
422 SUPREME COURT. REPORTS [2015] 1 S.C.R.
A be fastened only'
by reason .
of a provision of a statute and
not otherwise. for the said purpose, a legal fiction has to
be created. Even under a special statute when the
vicarious criminal liability is fastened on a person on the
premise that he was in charge of the affairs of the
B company and responsible to it, all the ingredients laid down
under the statute must be fulfilled. A legal fiction must be
confined to the object and purport for which it has been
created."
6. Sharon Michael v. State of T.N. 17
c
"16. The first information report contains details of the
terms of contract entered into by and between the parties
as also the mode and manner in which they were
implemented. Allegations have been made against the
D appellants in relation to execution of the contract. No case
of criminal misconduct on their part has been made out
before the formation of the contract. There is nothing to
show that the appellants herein who hold different positions
in the appellant Company made any representation in their
E personal capacities and, thus, they cannot be made
vicariously liable only because they are employees of the
Company."
7. Keki Hormusji Gharda v. Mehervan Rustom /ram18
F "16. We have noticed hereinbefore that despite of the said
road being under construction, the first respondent went
to the police station thrice. He, therefore, was not
obstructed from going to the police station. In fact, a firm
action had been taken by the authorities. The workers were
G asked notto do any work on the road. We, therefore, fail
to appreciate that how, in a situation of this nature, the
Managing Director and the Directors of the Company as
17. (2009) 3 sec 375.
H 1s. (2009) 6 sec 475.
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 423
INVESTIGATION [A.K. SIKRI, J.]
also the Architect can be said to have committed an A
offence under Section 341 IPC.
17. The Penal Code, 1860 save and except in some
matters does not contemplate any vicarious liability on the
part of a person. Commission of an offence by raising a B
legal fiction or by creating a vicarious liability in term:; of
the provisions of a statute must be expressly stated. The
Managing Director or the Directors of the Company, thus.
cannot be said to have committed an offence only becau.se
they are holders of offices. The learned Additional Chief
Metropolitan Magistrate, therefore, in our opinion, was not C
correct in issuing summons without taking into
consideration this aspect of the matter. The Managing
Director and the Directors of the Company should not have
been summoned only because some allegations were
made against the Company. D
18. In Pepsi Foods Ltd. v. Special Judicial Magistrate
(1998) 5 sec 749 this Court held as under: (SCC p. 760,
para 28)
E
"28. Summoning of an accused in a criminal case
is a serious matter. Criminal law cannot be set into
motion as a matter of course. It is not that the
complainant has to bring only two witnesses to
support his allegations in the complaint to have the
criminal law set into motion. The order of the F
Magistrate summoning the accused must reflect
that he has applied his mind to the facts of the case
and the law applicable thereto. He has to examine
the nature of allegations made in the complaint and
the evidence both oral and documentary in support G
thereof and would that be sufficient for the
complainant to succeed in bringing charge home
to the accused. It is not that the Magistrate is a silent
spectator at the time of recording of preliminary
evidence before summoning of the accused. The . H
424 SUPREME COURT REPORTS [2015] 1 S.C.R.
A Magistrate has to carefully scrutinise the evidence
brought on record and may even himself put
questions to the complainant and his witnesses to
elicit answers to find out the truthfulness of the
allegations or otherwise and then examine if any
B offence is prima facie committed by all or any of
the accused."
19. Even as regards the availability of the remedy of filing
an application for discharge, the same would not mean that
although the allegations made in the complaint petition
c even if given face value and taken to be correct in its
entirety, do not disclose an offence or it is found to be
otherwise an abuse of the process of the court, still the
High Court would refuse to exercise its discretionary
jurisdiction under Section 482 of the Code of Criminal
D Procedure."
40. It is stated at the cost of repetition that in the present
case, while issuing summons against the appellants, the
Special Magistrate has taken shelter under a so-called legal
E principle, which has turned out to be incorrect in law. He has
not recorded his satisfaction by mentioning the role played by
the appellants which would bring them within criminal net. In this
behalf, it would be apt to note that the following observations
of this Court in the case of GHCL Employees Stock Option
F Trust v. India lnfoline Ltd. 19 :
"19. In the order issuing summons, the learned Magistrate
has not recorded his satisfaction about the prima facie
case as against Respondents 2 to 7 and the role played
by them in the capacity of Managing Director, Company
G Secretary or Directors which is sine qua non for initiating
criminal action against them. (Thermax Ltd. v. K.M. Johny
followed)
H 19. (2013) 4 sec 505.
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 425
INVESTIGATION [A.K. SIKRI, J.]
~~~ A
21. In the instant case the High Court has correctly noted
that issuance of summons against Respondents 2 to 7 is
illegal and amounts to abuse of process of law. The order
of the High Court, therefore, needs- no interference by this B
Court."
41. We have already mentioned above that even if the CBI
did not implicate the appellants, if there was/is sufficient
material on record to proceed against these persons as well,
the Special Judge is duly empowered to take cognizance C
against these persons as well. Under Section 190 of the Code,
any Magistrate of first class (and in those cases where
Magistrate of the second class is specially empowered to do
so) may take cognizance of any offence under the following
three eventualities: D
(a) upon receiving a complaint of facts which
constitute such offence;
(b) upon a police report of such facts; and
E
(c) upon information received from any person other
than a police officer, or upon his own knowledge,
that such offence has been committed.
42. This Section which is the starting section of Chapter F
XIV is subject to the provisions of the said Chapter. The
expression "taking cognizance" has not been defined in the
Code. However, when the Magistrate applies his mind for
proceeding under" Sections 200-203 of the Code, he is said
to have taken cognizance of an offence. This legal position is G
explained by this Court in S.K. Sinha, Chief Enforcement
Officer v. Vi deacon International Ltd & Ors. 20 in the following
words:
20. (200B) 2 sec 492. H
426 SUPREME COURT REPORTS [2015] 1 S.C.R.
A "19. The expression "cognizance" has not been defined in
the Code. But the word (cognizance) is of indefinite import.
It has no esoteric or mystic significance in criminal law. It
merely means "become aware of: and when used with
reference to a court or a Judge, it connoted "to take notice
B of judicially". It indicates the point when a court or a
Magistrate takes judicial notice of an offence with a view
to initiating proceedings in respect of such offence said
to have been committed by someone.
20. 'Taking Cognizance" does not involve any formal action
c of any kind. It occurs as soon as a Magistrate applies his
mind to the suspected commission of an offence .... "
Sine Qua Non for taking cognizance of the offence is the
application of mind by the Magistrate and his satisfaction that
D the allegations, if proved, would constitute an offence. It is,
therefore, imperative that on a complaint or on a police report,
the Magistrate is bound to consider the question as to whether
the same discloses commission of an offence and is required
to form such an opinion in this respect. When he does so and
E decides to issue process, he shall be said to have taken
cognizance. At the stage of taking cognizance, the only
consideration before the Court remains to consider judiciously
whether the material on which the prosecution proposes to
prosecute the accused brings out a prima facie case or not.
F 43. Cognizance of an offence and prosecution of an
offender are two different things. Section 190 of the Code
empowered taking cognizance of an offence and not to deal
with offenders. Therefore, cognizance can be taken even if
offender is not known or named when the complaint is filed or
G FIR registered. Their names may transpire during investigation
or afterwards.
44. Person who has not joined as accused in the charge-
sheet can be summoned at the stage of taking cognizance
H under Section 190 of the Code. There is no question of
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 427
INVESTIGATION [A.K. SIKRI, J.]
applicability of Section 319 of the Code at this stage (See SWIL A
Ltd. v. State of Delhi2 1 ). It is also trite that even if a person is
not named as an accused by the police in the final report
submitted, the Court would be justified in taking cognizance of
the offence and to summon the accused if it feels that the
evidence and material collected during investigation justifies B
prosecution of the accused (See Union of India v. Prakash P.
Hinduja and anothefl 2 ). Thus, the Magistrate is empowered to
issue process against some other person, who has not been
charge-sheeted, but there has to be sufficient material in the
police report showing his involvement. In that case, the c
Magistrate is empowered to ignore the conclusion arrived at
by the investigating officer and apply his mind independently
on the facts emerging from the investigation and take
cognizance of the case. At the same time, it is not permissible
at this stage to consider any material other than that collected
0
by the investigating officer.
45. On the other hand, Section 204 of the Code deals with
the issue of process, if in the opinion of the Magistrate taking
cognizance of an offence, ttiere is sufficient ground for
proceeding. This Section relates to commencement of a E
criminal proceeding. If the Magistrate taking cognizance of a
case (it may be the Magistrate receiving the complaint or to
whom it has been transferred under Section 192), upon a
consideration of the materials before him (i.e., the complaint,
examination of the complainant and his witnesses if present, F
or report of inquiry, if any), thinks that there is a prima facie
case for proceeding in respect of an offence, he shall issue
process against the accused.
46. A wide discretion has been given as to grant or refusal G
of process and it must be judicially exercised. A person ought
not to be dragged into Court merely because a complaint has
been filed. If a prima facie case has been made out, the
21. (2001) 6 sec 670.
22. (2003) 6 sec 195. H
428 SUPREME COURT REPORTS [2015] 1 S.C.R.
A .Magistrate ought to issue process and it cannot be refused
merely because he thinks that it is unlikely to result in a
conviction.
47. However, the words "sufficient grounds for proceeding"
appearing in the Section are of immense importance. It is these
8
words which amply suggest that an opinion is to be formed only
after due application of mind that there is sufficient basis for
proceeding against the said accused and formation of such an
opinion is to be stated in the order itself. The order is liable to
be set aside if no reason is given therein while coming to the
C conclusion that there is prima facie case against accused,
though the order need not contain detailed reasons. A fortiori,
the order would be bad in law if the reason given turns out to
be ex facie incorrect.
D 48. However, there has to be a proper satisfaction in this
behalf which should be duly recorded by the Special Judge on
the basis of material on record. No such exercise is done. In
this scenario, having regard to the aforesaid aspects coupled
with the legal position explained above, it is difficult to sustain
E the impugned order dated 19.03.2013 in its present form
insofar as it relates to implicating the appellants and
summoning them as accused persons. 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
F 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.
Epilogue
G
49. While parting, we make it clear that since on an
erroneous presumption in law, the Special Magistrate has
issued the summons to the appellants, it will always be open
to the Special Magistrate to undertake the exercise of going
H through the material on record and on that basis, if he is
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF 429
INVESTIGATION [A.K. SIKRI, J.]
satisfied that there is enough incriminating material on record A
to proceed against the appellants as well, he may pass
appropriate orders in this behalf. We also make it clear that
even if at this stage, no such prima facie material is found, but
during the trial, sufficient incriminating material against these
appellants surfaces in the form of evidence, the Special Judge B
shall be at liberty to exercise his powers under Section 319 of
the Code to rope in the appellants by passing appropriate
orders in accordance with law at that stage.
Nidhi Jain Appeals disposed of,
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "alter ego doctrine"Sign in to search