# SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF INVESTIGATION

- **Citation:** [2015] 1 S.C.R. 377
- **Court:** Supreme Court of India
- **Decided:** 2015-01-09
- **Case number:** Criminal Appeal No. 34 of 2015
- **Bench:** H.L. Dattu, Madan 8. Lokur, A.K. Sikri
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sunil-bharti-mittal-v-central-bureau-of-investigation-30442
- **Pages:** 53

## Headnote

A
B
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.
c
Doctrines/Principles -
Principle of 'alter-ego -
Application of
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
0 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 chargesheet 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

## Text

_Characters 0–39,780 of 99,180. This is a partial read: ask again with offset=39780 for what follows._

[2015] 1 S.C.R. 377
SUNIL BHARTI MITTAL
v.
CENTRAL BUREAU OF INVESTIGATION
(Criminal Appeal No. 34 of 2015)
JANUARY 09, 2015
[H.L. DATTU, CJI, MADAN 8. LOKUR AND
A.K. SIKRI, JJ.]
A
B
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.
c
Doctrines/Principles -
Principle of 'alter-ego -
Application of
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
0 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 chargesheet 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
8
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
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.
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
{
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
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
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. [Paras
41, 42] [425-C, F, G; 426-D-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
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
A
B
c
D
E
F
G
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
0 exercise is done. Thus, it is difficult to sustain the
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]
H
SWIL Ltd. v. State of Delhi 2001 (1) Suppl. SCR 527:
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
2012 (5) SCR 503
Referred to
Para 18
D
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
A
B
c
384
SUPREME COURT REPORTS
[2015] 1 S.C.R.
2001 (1) Suppl. SCR 527 Referred to
2003 (1) Suppl. SCR 307 Referred to
Para 44
Para 44
CRIMINAL AP PELLA TE JURISDICTION : Criminal Appeal
No. 34 of 2015
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.
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:
"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
F
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
A
B
c
D
386
SUPREME COURT REPORTS
[2015] 1 S.C.R.
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 20062007, now register a case and conduct thorough
investigation with particular emphasis on the loss caused
to the public exchequer and corresponding gain to the
licensees/service providers and also on the issue of
allowing use of dual/alternate technology by some service
providers even before the decision was made public vide
press release dated 19.10.2007."
5. Thereafter, detailed judgment was passed by the Bench
of this Court in the aforesaid proceedings on 2nd February,
2012 which is reported as Centre for Public Interest Litigation
& Ors. v. Union of India & Ors. 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
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.
B
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,
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
D
E
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
D.
"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.
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
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
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-2011A-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 (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
A
B
c.
D
E
F
G
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
0
circulation of General Order on 01.02.2002 to all Cellular Mobile
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 chargesheet, 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
F
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 Bharti Mittal was Chairman-cumManaging 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.
H
3.
I have carefully gone through the copy of FIR,
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.
H
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,
SUNIL BHARTI MITTAL v. CENTRAL BUREAU OF
395
INVESTIGATION [A.K. SIKRI, J.]
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
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
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
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
2.
(2011) 1 sec 74.
3.
(2010) 10 sec 479.
A
B
c
D
E
F
G
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.
D
E
F
G
xx
xx
xx
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
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.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
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
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:
"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
s.
(2012) s sec 661
A
B
c
D
E
F
G
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.