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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”)  

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were granted.  After sometime, an information was disclosed to  

the Central Bureau of Investigation (CBI) alleging various forms of  

irregularities committed in connection with the grant of the said  

UASL which resulted in huge losses to the public exchequer.  On  

the basis of such source information, the CBI registered a case  

bearing RC DAI 2009 A 0045 on 21st October, 2009.  It is now  

widely  known as  “2G Spectrum Scam Case”.   The  case  was  

registered  against  unknown  officers  of  the  Department  of  

Telecommunications (DOT) as well as unknown private persons  

and companies.

3. While  the  investigation  into  the  said  case  was  still  on,  a  writ  

petition was filed by an NGO known as Center for Public Interest  

Litigation (CPIL) before the High Court of Delhi seeking directions  

for a Court monitored investigation. Apprehension of the petitioner  

was that without such a monitoring by the Court, there may not be  

a fair and impartial investigation. Delhi High Court dismissed the  

petition.

4. Challenging the order of the Delhi High Court, CPIL filed Special  

Leave  Petition  before  this  Court  under  Article  136  of  the  

Constitution  of  India.   At  that  time,  another  petitioner,  

Dr.Subramanian Swamy, directly approached the Supreme Court  

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by way of a writ petition under Article 32 of the Constitution of  

India  seeking  almost  the  same  reliefs  on  similar  kinds  of  

allegations.  Leave was granted in the said SLP, converting it into  

a civil appeal.  Said civil appeal and writ petition were taken up  

together  for  analogous  hearing.   On  16th December,  2010,  a  

detailed interim order  was passed in  the civil  appeal  inter  alia  

giving the following directions:

“a.  The CBI shall conduct thorough investigation into  various issues highlighted in the report of the Central  Vigilance Commission, which was forwarded to the  Director,  CBI  vide letter  dated 12.10.2009 and the  report  of  the  CAG,  who  have  prima  facie found  serious irregularities in the grant of licences to 122  applicants, majority of whom are said to be ineligible,  the blatant violation of the terms and conditions of  licences  and  huge  loss  to  the  public  exchequer  running  into  several  thousand  crores.  The  CBI  should  also  probe  how  licences  were  granted  to  large number of  ineligible applicants and who was  responsible for the same and why the TRAI and the  DoT did not take action against those licensees who  sold their stakes/equities for many thousand crores  and also against  those who failed to  fulfill  roll  out  obligations  and  comply  with  other  conditions  of  licence.   

b. The CBI shall, if it has already not registered first  information  report  in  the  context  of  the  alleged  irregularities committed in the grant of licences from  2001 to 2006-2007, now register a case and conduct  thorough  investigation  with  particular  emphasis  on  the  loss  caused  to  the  public  exchequer  and  corresponding  gain  to  the  licensees/service  providers and also on the issue of allowing use of  dual/alternate technology by some service providers  even  before  the  decision  was  made  public  vide  press release dated 19.10.2007.”

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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 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

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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  

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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, 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.   

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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  

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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.)

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(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)  

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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.)

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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  

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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  

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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  

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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  

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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 Inc2.  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 India6

“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 Bihar7

“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 Haryana8

“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  

Pradesh9 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  

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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  

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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  

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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.)

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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.)

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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  

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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  

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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.  

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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  

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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  

Enforcement11.  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.)

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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  

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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  

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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)

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“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.)

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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.)

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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 Gujarat12

“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.)

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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 Haryana13

“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 Gujarat15

“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. Mehta16

“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.)

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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 Irani18

“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.)

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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.)

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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)

xx xx xx

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.)

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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.)

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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.)

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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 Delhi21).  

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  another22).   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.)

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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.)

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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 ]