In 2008, during the tenure of the Minister of Telecommunications, Unified Access Services Licenses were granted. Allegations of irregularities in the grant of Unified Access Services Licenses surfaced, leading ...
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Page 1 REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 34 OF 2015
(arising out of Special Leave Petition (Crl.) No. 2961 of 2013)
SUNIL BHARTI MITTAL .....APPELLANT(S)
VERSUS
CENTRAL BUREAU OF INVESTIGATION .....RESPONDENT(S)
W I T H
CRIMINAL APPEAL NO. 35 OF 2015
(arising out of Special Leave Petition (Crl.) No. 3161 of 2013)
A N D
CRIMINAL APPEAL NOS. 36-37 OF 2015
(arising out of Special Leave Petition (Crl.) No. 3326-3327 of 2013)
J U D G M E N T
A.K. SIKRI, J.
Leave granted.
Introduction:
2.In the year 2008, during the tenure of the then Minister of
Telecommunications, Unified Access Services Licenses (“UASL”)
Criminal Appeal No. of 2015 & Ors. Page 1 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 2 were granted. After sometime, an information was disclosed to
the Central Bureau of Investigation (CBI) alleging various forms of
irregularities committed in connection with the grant of the said
UASL which resulted in huge losses to the public exchequer. On
the basis of such source information, the CBI registered a case
bearing RC DAI 2009 A 0045 on 21
st
October, 2009. It is now
widely known as “2G Spectrum Scam Case”. The case was
registered against unknown officers of the Department of
Telecommunications (DOT) as well as unknown private persons
and companies.
3.While the investigation into the said case was still on, a writ
petition was filed by an NGO known as Center for Public Interest
Litigation (CPIL) before the High Court of Delhi seeking directions
for a Court monitored investigation. Apprehension of the petitioner
was that without such a monitoring by the Court, there may not be
a fair and impartial investigation. Delhi High Court dismissed the
petition.
4.Challenging the order of the Delhi High Court, CPIL filed Special
Leave Petition before this Court under Article 136 of the
Constitution of India. At that time, another petitioner,
Dr.Subramanian Swamy, directly approached the Supreme Court
Criminal Appeal No. of 2015 & Ors. Page 2 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 3 by way of a writ petition under Article 32 of the Constitution of
India seeking almost the same reliefs on similar kinds of
allegations. Leave was granted in the said SLP, converting it into
a civil appeal. Said civil appeal and writ petition were taken up
together for analogous hearing. On 16
th
December, 2010, a
detailed interim order was passed in the civil appeal inter alia
giving the following directions:
“a. The CBI shall conduct thorough investigation into
various issues highlighted in the report of the Central
Vigilance Commission, which was forwarded to the
Director, CBI vide letter dated 12.10.2009 and the
report of the CAG, who have prima facie found
serious irregularities in the grant of licences to 122
applicants, majority of whom are said to be ineligible,
the blatant violation of the terms and conditions of
licences and huge loss to the public exchequer
running into several thousand crores. The CBI
should also probe how licences were granted to
large number of ineligible applicants and who was
responsible for the same and why the TRAI and the
DoT did not take action against those licensees who
sold their stakes/equities for many thousand crores
and also against those who failed to fulfill roll out
obligations and comply with other conditions of
licence.
b.The CBI shall, if it has already not registered first
information report in the context of the alleged
irregularities committed in the grant of licences from
2001 to 2006-2007, now register a case and conduct
thorough investigation with particular emphasis on
the loss caused to the public exchequer and
corresponding gain to the licensees/service
providers and also on the issue of allowing use of
dual/alternate technology by some service providers
even before the decision was made public vide
press release dated 19.10.2007.”
Criminal Appeal No. of 2015 & Ors. Page 3 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 4 5.Thereafter, detailed judgment was passed by the Bench of this
Court in the aforesaid proceedings on 2
nd
February, 2012 which is
reported as Centre for Public Interest Litigation & Ors. v.
Union of India & Ors.
1
. The Court allowed the appeal as well as
the writ petition, holding that spectrum licences were illegally
granted to the beneficiaries at the cost of the nation. The Court
accordingly cancelled the licences granted to the private
respondents on or after 10.01.2008 and issued certain directions
for grant of fresh licences and allocation of spectrum in 2G Band.
It was also specifically clarified that the observations in the said
judgment would not, in any manner, affect the pending
investigation by the CBI, Directorate of Enforcement and other
agencies or cause prejudice to those who are facing prosecution
in the cases registered by the CBI 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. Thereafter, order dated 11.04.2011 was
passed in that very 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
1
(2012) 3 SCC 1
Criminal Appeal No. of 2015 & Ors. Page 4 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 5 and a Senior Advocate was nominated as the Special Public
Prosecutor by the Court itself, who also agreed with his
appointment in that 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 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,
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 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
6.The CBI registered another RC being RC DAI 2011 A 0024 on
Criminal Appeal No. of 2015 & Ors. Page 5 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 6 17
th
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, 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. M/s Bharti Cellular Limited, M/s Hutchison Max
Telecom (P) Limited and M/s Sterling Cellular Limited. After
registering the said RC, the 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 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:
“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.
Criminal Appeal No. of 2015 & Ors. Page 6 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 7 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 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.
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 Special Judge, on
21st December, 2012.
8.Before proceeding further, it would be prudent to mention 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 much concerned
about the merits of the allegations in these proceedings, a brief
account thereof will facilitate in understanding the background
leading to the roping in of the appellants in these proceedings.
During monitoring of the investigation of CBI Case No. RC-DAI-
2009-A-0045 (2G Spectrum Case), this Court vide its order dated
16.12.2010 directed CBI to investigate the irregularities
committed in the grant of licences from 2001 to 2007 with partial
Criminal Appeal No. of 2015 & Ors. Page 7 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 8 emphasis on the loss caused to the public exchequer and
corresponding gain to the Licensees/Service Providers.
Accordingly, in compliance to the said order, a Preliminary
Enquiry vide No. PE-DAI-2011-A-0001 was registered on
04.01.2011 at CBI, ACB, New Delhi. During inquiry of the said
PE, it was learnt from reliable sources that vide a decision dated
31.01.2002 of the then MoC&IT, on the recommendation of
certain DoT officers, the allocation of additional spectrum beyond
6.2 MHz upto 10 MHz (paired) was approved wherein only 1%
additional revenue share was charged thereby causing revenue
loss to Government exchequer.
9.As pointed above, on the basis of the outcome of the aforesaid
inquiry, a regular case was registered on 17.11.2011 for the
offences punishable under Sections 120-B IPC r/w 13 (2) and 13
(1)(d) of the Prevention of Corruption Act, 1988 (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 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
Criminal Appeal No. of 2015 & Ors. Page 8 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 9 (COAI) had made a request to DoT, in the year 2001, for
allocating additional spectrum particularly in Delhi 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 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 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 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 Telecom Service (CMTS)
Criminal Appeal No. of 2015 & Ors. Page 9 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 10 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 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.
10.Thus, the allegation, in nutshell, is for grant of additional spectrum
by lowering the condition of 9 lacs subscribers to 4/5 lacs
subscribers, by only charging additional 1% AGR instead of
charging additional 2% AGR which has caused losses to the
Government Revenue. It is further the case of the prosecution
that this was the result of conspiracy hatched between
Mr.Shyamal Ghosh and the then Minister as well as the accused
Cellular Operator Companies. 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 to by Mr. Shyamal
Ghosh and thereafter approved by the Minister on the same day.
On that basis, circular was issued 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
Criminal Appeal No. of 2015 & Ors. Page 10 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 11 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 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 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 M/s Sterling Cellular
Limited as the accused persons in respect of offences under
Section 13(2) read with 13(1)(d) of the PC Act and allied offences.
The Impugned Order
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 accused persons. At
the same time, the learned Special Judge also found that Mr.Sunil
Criminal Appeal No. of 2015 & Ors. Page 11 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 12 Bharti Mittal was Chairman-cum-Managing Director of Bharti
Cellular Limited, Mr. Asim Ghosh was Managing Director of
Hutchison Max Telecom (P) Limited and Mr. Ravi Ruia was a
Director in Sterling Cellular Limited, who used to chair the
meetings of its Board. According to him, in that capacity, these
persons, prima facie, could be treated as controlling the affairs of
the respective companies and represent the directing mind and
will of each company. They were, thus, “alter ego” of their
respective companies and the acts of the companies could be
attributed and imputed to them. On this premise, the Special
Judge felt that there was enough material on record to proceed
against these three persons as well. Thus, while taking
cognizance of the case, he decided to issue summons not only to
the four accused named in the charge-sheet but the aforesaid
three persons as well.
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 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
Criminal Appeal No. of 2015 & Ors. Page 12 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 13 becomes necessary to take note of the brief order 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 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.
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 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,
chargesheet, statement of witnesses and documents
on 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 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
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
Criminal Appeal No. of 2015 & Ors. Page 13 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 14 be attributed and imputed to them. 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.”
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. Mittal was
interrogated but in the opinion of CBI, no case was made out
against him. Mr. Ravi Ruia was not even summoned during
investigation.
The Arguments : Appellants
16.M/s Harish Salve and Fali Nariman, learned senior 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. 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
Criminal Appeal No. of 2015 & Ors. Page 14 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 15 appeal arising out of 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 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 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 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 “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”.
Criminal Appeal No. of 2015 & Ors. Page 15 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 16 That was the reason given by the Special Judge finding enough
material to proceed against them also which resulted in issuing of
summons against 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, inasmuch as general
principle is that the acts of individual, who 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 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 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
Criminal Appeal No. of 2015 & Ors. Page 16 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 17 reliance upon the decision of this Court in Iridium India Telecom
Ltd. v. Motorola Inc
2
. 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
Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd.
3
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 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, Accused 1 was acting under
their control and management. It bears repetition that
the only averment 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 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 was monitoring them in his capacity as the
Chairman of MSEB and it was at his instance that the
subject interpolation was made in Ext. C-64.
xx xx xx
29.In this regard, it would be useful to advert to the
observations made by a three-Judge Bench of this
2(2011) 1 SCC 74
3(2010) 10 SCC 479
Criminal Appeal No. of 2015 & Ors. Page 17 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 18 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 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 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.”
Mr. Salve also referred to the following observations in S.K.
Alagh v. State of U.P.
4
:
12. The short question which arises for consideration
is as to whether the complaint petition, even if given
face 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
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 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 SCC 581.”
Reliance was also placed on the decision in the case of
Aneeta Hada v. Godfather Travels & Tours (P) Ltd.
5
, with
4(2008) 5 SCC 662
5(2012) 5 SCC 661
Criminal Appeal No. of 2015 & Ors. Page 18 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 19 particular emphasis on the following passage:
“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 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
intendment is absolutely plain. As is perceptible, the
provision makes the functionaries and the companies
to 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 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 agency at the appropriate 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 to be proceeded
Criminal Appeal No. of 2015 & Ors. Page 19 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 20 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 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 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 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 applicable and erroneously referred to, he
had no option but to file the present appeal for quashing of the
notice of cognizance against him. Mr. Viswanathan in support of
Criminal Appeal No. of 2015 & Ors. Page 20 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 21 his submission referred certain judgments, which we shall discuss
at the appropriate stage.
The Arguments: Respondents
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 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 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 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
Criminal Appeal No. of 2015 & Ors. Page 21 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 22 Minister. This affidavit also 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 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/person has to be the top 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 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 the
FIR, charge-sheet, statement of witnesses and documents on
record was relatable to the three individuals, including the two
Criminal Appeal No. of 2015 & Ors. Page 22 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 23 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 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 India
6
“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 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 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.”
2.Kishun Singh v. State of Bihar
7
“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 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
6(2007) 1 SCC 110
7(1993) 2 SCC 16
Criminal Appeal No. of 2015 & Ors. Page 23 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 24 may culminate 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 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 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
Raghubans Dubey v. State of Bihar
(1967) 2 SCR
423stated that once cognizance of an offence is
taken it becomes the Court’s 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 of the proceeding initiated by its taking
cognizance of an offence’. Even after the present
Code came into force, the 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
8
“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 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 the police report to stand trial along with
8(2014) 3 SCC 306
Criminal Appeal No. of 2015 & Ors. Page 24 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 25 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, 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.”
24.He also referred to the decision in the case of Lee Kun Hee,
President, Samsung Corpn., South Korea v. State of Uttar
Pradesh
9
wherein this Court has set down the limits of High
Court's power under Section 482 of the Code to interfere with
summoning orders passed by the trial court, as follows:
“10. JCE Consultancy filed a criminal complaint
(Complaint No. 30 of 2005) under Sections 403,
405, 415, 418, 420 and 423 read with Sections 120-
B and 34 of the Penal Code, 1860 before the VIIth
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 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 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 Accused 6; Sky Impex Ltd. was
impleaded as Accused 7; and the Chairman of Sky
Impex Ltd. was impleaded as Accused 8.
9(2012) 3 SCC 132
Criminal Appeal No. of 2015 & Ors. Page 25 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 26 xx xx xx
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 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 Korea.
xx xx xx
54. The fourth contention advanced at the hands of
the learned counsel for the appellants was aimed at
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 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.
xx xx xx
57. In paras 24 to 30, this Court in Iridium India
Telecom Ltd. case
(2011) 1 SCC 74 noticed the
facts pertaining to the controversy, and the
emerging legal technicalities 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 submissions made by the learned
Senior Counsel. A bare perusal of the submissions
Criminal Appeal No. of 2015 & Ors. Page 26 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 27 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
both sides. The entire scenario painted by both the
sides is circumscribed by ‘ifs’ and ‘buts’. A mere
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 respondents have
made 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 against the respondents.”
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 M.N. Ojha v. Alok
Kumar Srivastav
(2009) 9 SCC 682 . In M.N. Ojha
case similar views as in Bhajan Lal case
1992 Supp
(1) SCC 335 came to be recorded in the following
words: (M.N. Ojha case, SCC pp. 686-88, paras 25
& 27-30)
“25. Had the learned SDJM applied his mind
to the facts and circumstances and 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 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
27. The case on hand is a classic illustration
of non-application of mind by the learned
Magistrate. The learned Magistrate did not
Criminal Appeal No. of 2015 & Ors. Page 27 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 28 scrutinise even the contents of the complaint,
leave aside the material documents available
on record. The learned Magistrate truly was a
silent spectator at the time of recording of
preliminary evidence before summoning the
appellants.
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 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
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 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 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 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 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
Criminal Appeal No. of 2015 & Ors. Page 28 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 29 the 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 presented by the complainant is
specific and categorical. 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 of the impairments referred in Iridium India
Telecom Ltd. case. Accordingly, we leave it open to
the appellants to canvass the legal issues, as were
canvassed before us, before the trial court. After the
rival parties have led their evidence the trial court
will return its finding thereon in accordance with law
without being influenced by any observations made
on the merits of the controversy hereinabove, or
hereafter.
xx xx xx
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 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 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, according to the
respondents, has been the categorical stance of
Criminal Appeal No. of 2015 & Ors. Page 29 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 30 JCE Consultancy in the criminal complaint, as also,
in the pre-summoning evidence recorded before the
VIIth Additional Chief Judicial Magistrate,
Ghaziabad under 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 Impex Ltd. before
this Court. According 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 Impex Ltd. As such, it is
submitted, that the respondents have per se
repudiated all 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
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 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 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.”
25.He concluded his submission by reiterating that when it was a
case of circumstantial evidence which appeared on record in
Criminal Appeal No. of 2015 & Ors. Page 30 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 31 abundance, the trial court was right in summoning the appellants
and in fact, judgment in Keshav Mahindra v. State of M.P.
10
fully
supported the impugned order. On the other hand, 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 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. 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 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 vicarious liability. He pointed
out that in para 4 of the impugned order, the learned Special
10(1996) 6 SCC 129
Criminal Appeal No. of 2015 & Ors. Page 31 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 32 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.
Our Analysis of the Subject Matter
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 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 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 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 by the Government to charge 4% of AGR
whereas it was realised much later in the year 2010 when the
Criminal Appeal No. of 2015 & Ors. Page 32 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 33 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 was not confined to the appellant's company,
namely M/s 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
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 exchequer and for 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 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
Criminal Appeal No. of 2015 & Ors. Page 33 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 34 challenged. Therefore, we deem it unnecessary to go into this
question, which position was even conceded by all the counsel
appearing before us.
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.
(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 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 (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 gone into. The learned Special Judge
Criminal Appeal No. of 2015 & Ors. Page 34 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 35 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 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
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 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, 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.
Criminal Appeal No. of 2015 & Ors. Page 35 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 36 After recording his satisfaction qua the four said accused
persons, discussion 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 hand, 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 of the respective companies.
ii) Because of their controlling position, they
represent the directing mind and will of each
company.
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 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 proposition, to
Criminal Appeal No. of 2015 & Ors. Page 36 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 37 proceed against the appellants is backed by 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 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
Enforcement
11
. The Constitution Bench had held that a company
can be prosecuted and convicted for an offence 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:
“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 any opinion on that
issue.”
34.In Iridium India (supra), the aforesaid question fell directly for
11(2005) 4 SCC 530
Criminal Appeal No. of 2015 & Ors. Page 37 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 38 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 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 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 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
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 the various attributes it may have,
there should be imputed the attribute of a mind
capable of knowing 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, 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 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, according to the authorities that
Viscount Caldecote, L.C.J., has cited, his
Criminal Appeal No. of 2015 & Ors. Page 38 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 39 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.
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 which hold the tools and act in
accordance with directions from the centre.
Some of the people in the company are mere
servants and agents who are nothing more
than hands to do the work and 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 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 personal
fault of the company. That is made clear in Lord
Haldane’s speech in Lennard’s Carrying Co.
Ltd. v. Asiatic Petroleum Co. Ltd.
(AC at pp.
713, 714). So also in the criminal law, in cases
where the law requires a guilty mind as a
condition 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 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
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
Criminal Appeal No. of 2015 & Ors. Page 39 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 40 intentions. A corporation has none of these: it
must act through living persons, 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 being vicariously liable. He is not
acting as a servant, 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 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 company’s servant or agent. In
that case any liability of the company 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 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
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 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 Enforcement
(2005) 4 SCC 530 . On a
detailed consideration of the entire body of case laws
in this country as well as other jurisdictions, it has
been observed as follows: (SCC p. 541, para 6)
Criminal Appeal No. of 2015 & Ors. Page 40 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 41 “6. There is no dispute that a company is liable
to be prosecuted and punished for criminal
offences. 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 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 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 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.
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 of mind of the
company and, therefore, on this premise, acts of the company is
Criminal Appeal No. of 2015 & Ors. Page 41 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 42 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 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:
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 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.
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, by specifically
Criminal Appeal No. of 2015 & Ors. Page 42 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 43 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 example is Section
141 of the Negotiable Instruments Act, 1881. In Aneeta Hada
(supra), the Court noted that if a group of persons that guide the
business of the company have the criminal intent, that would be
imputed to the body corporate and it is in this backdrop, Section
141 of the Negotiable Instruments 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 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 is elaborated in various other judgments. We have
already taken note of Maharashtra State Electricity
Distribution Co. Ltd. (supra) and S.K. Alagh (supra). Few other
judgments reiterating this principle are the following:
Criminal Appeal No. of 2015 & Ors. Page 43 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 44 1.Jethsur Surangbhai v. State of Gujarat
12
“9. With due respect what the High Court seems to
have 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
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,
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
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 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 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 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 two
items. Indeed, if the Chairman was to be made liable
12(1984) Supp. SCC 207
Criminal Appeal No. of 2015 & Ors. Page 44 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 45 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 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 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 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.”
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 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.”
3.Hira Lal Hari Lal Bhagwati v. CBI
14
“30. In our view, under the penal law, there is no
concept of vicarious liability unless the said statute
covers the same within its ambit. In the instant case,
13(1989) 4 SCC 630
14(2003) 5 SCC 257
Criminal Appeal No. of 2015 & Ors. Page 45 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 46 the said law which prevails in the field i.e. the
Customs Act, 1962 the appellants have been
thereinunder wholly discharged and the GCS
granted immunity from prosecution.”
4.Maksud Saiyed v. State of Gujarat
15
“13. Where a jurisdiction is exercised on a complaint
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 or the Directors of the Company when the
accused is the Company. The learned Magistrate
failed to pose unto himself the correct question 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 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 obligatory on the part of the
complainant to make requisite allegations which
would attract the provisions constituting vicarious
liability.”
5.R. Kalyani v. Janak C. Mehta
16
“32. Allegations contained in the FIR are for
commission of offences under a general statute. A
vicarious liability can 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 company and
responsible to it, all the ingredients laid down under
the statute must be fulfilled. A legal fiction must be
15(2008) 5 SCC 668
16(2009) 1 SCC 516
Criminal Appeal No. of 2015 & Ors. Page 46 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 47 confined to the object and purport for which it has
been created.”
6.Sharon Michael v. State of T.N.
17
“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 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 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 Irani
18
“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 asked not to 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 also
the Architect can be said to have committed an
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 legal fiction or by creating a vicarious
liability in terms of the provisions of a statute must be
expressly stated. The Managing Director or the
Directors of the Company, thus, cannot be said to
17(2009) 3 SCC 375
18(2009) 6 SCC 475
Criminal Appeal No. of 2015 & Ors. Page 47 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 48 have committed an offence only because they are
holders of offices. The learned Additional Chief
Metropolitan Magistrate, therefore, in our opinion,
was not 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.
18. In Pepsi Foods Ltd. v. Special Judicial Magistrate
(1998) 5 SCC 749 this Court held as under: (SCC p.
760, para 28)
“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 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 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
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 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 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
Criminal Appeal No. of 2015 & Ors. Page 48 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 49 exercise its discretionary jurisdiction under Section
482 of the Code of Criminal 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 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 Trust v. India Infoline
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
Secretary or Directors which is sine qua non for
initiating criminal action against them. (Thermax
Ltd. v. K.M. Johny followed)
xxxxxx
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 Court.”
41.We have already mentioned above that even if the CBI did not
implicate the appellants, if there was/is sufficient material on
19(2013) 4 SCC 505
Criminal Appeal No. of 2015 & Ors. Page 49 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 50 record to proceed 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, 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:
(a)upon receiving a complaint of facts which
constitute such offence;
(b)upon a police report of such facts; and
(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 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 explained by this
Court in S.K. Sinha, Chief Enforcement Officer v. Videocon
International Ltd & Ors.
20
in the following words:
“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
20(2008) 2 SCC 492
Criminal Appeal No. of 2015 & Ors. Page 50 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 51 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 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 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 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 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.
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.
Criminal Appeal No. of 2015 & Ors. Page 51 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 52 Therefore, cognizance can be taken even if offender is not known
or named when the complaint is filed or 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 under Section
190 of the Code. There is no question of applicability of Section
319 of the Code at this stage (See SWIL Ltd. v. State of Delhi
21
).
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 prosecution of the accused (See Union of
India v. Prakash P. Hinduja and another
22
). 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 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
21(2001) 6 SCC 670
22(2003) 6 SCC 195
Criminal Appeal No. of 2015 & Ors. Page 52 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 53 collected 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, there is sufficient ground for proceeding. This Section
relates to commencement of a 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, 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 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 it is unlikely to result in a conviction.
47.However, the words “sufficient grounds for proceeding” appearing
Criminal Appeal No. of 2015 & Ors. Page 53 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 54 in the Section are of immense importance. It is these 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
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.
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 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 are, accordingly, allowed and order
summoning these appellants is set aside. The appeals arising
Criminal Appeal No. of 2015 & Ors. Page 54 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 55 out of SLP (Crl.) Nos. 3326-3327 of 2013 filed by Telecom
Watchdog are dismissed.
Epilogue
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 through the material
on record and on that basis, if he is satisfied that there is enough
incriminating material on record 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 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.
.........................................CJI.
(H.L. DATTU)
.............................................J.
(MADAN B. LOKUR)
.............................................J.
Criminal Appeal No. of 2015 & Ors. Page 55 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 56 (A.K. SIKRI)
NEW DELHI;
JANUARY 09, 2015.
Criminal Appeal No. of 2015 & Ors. Page 56 of 58
(arising out of SLP (Crl.) No. 2961 of 2013 & Ors.)
Page 57 ITEM NO. 1A COURT NO.1 SECTION II
(For Judgment)
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
CRIMINAL APPEAL NO. 34 OF 2015 @
PETITION FOR SPECIAL LEAVE TO APPEAL (Crl.) NO. 2961 OF 2013
Sunil Mittal .. Appellant(s)
vs.
Central Bureau of Investigation ..Respondent(s)
WITH
CRIMINAL APPEAL NO. 35 of 2015
(@ SLP(Crl.) No. 3161 of 2013
CRIMINAL APPEAL NOs.36-37 of 2015
(@ SLP(Crl.) Nos. 3326-3327 of 2013)
DATE : 09.01.2015 These matters were called on for
pronouncement of judgment today.
For Appellant(s) Mr. Harish Salve, Sr. Adv.
Mr. Fali S. Nariman, Sr. Adv.
Mr. Amit Desai, Sr. Adv.
Mr. Percival Billimonia, Adv.
Mr. Sidharth Agarwal, Adv.
Mr. Kamal Shankar, Adv.
Mr. Atul N, Adv.
Mr. Manpreet Lamba, Adv.
Mr. Gautam , Adv.
Mr. Utkarsh Saxena, Adv.
Mr. Utkarsh Saxena, Adv.
For Respondent(s) Ms. Pinky anand, ASG
Mr. Gopal Sankaranarayanan, Adv.
Mr. Rajesh Ranjan, Adv.
Mr. Balendu Shekhar, Adv.
Mr. B.V. Balram Das, Adv.
Ms. Meenakshi Grover, Adv.
Mr. Rohit Bhat, Adv.
Mr.D.S. Mehara, Adv.
---
2
Page 58 Hon'ble Mr. Justice A.K. Sikri pronounced the
judgment of the Bench comprising Hon'ble the Chief
Justice, Hon'ble Mr. Justice Madan B. Lokur and His
Lordship.
Leave granted.
The appeals arising out of SLP(Crl.) No. 2961
of 2013 and 3161 of 2013 are allowed. The appeals
arising out of SLP(Crl.) Nos. 3326-3327 of 2013 are
dismissed.
[ Charanjeet Kaur ] [ Vinod Kulvi ]
Court Master Asstt. Registrar
[ Signed reportable judgment is placed on the file ]
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