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Thursday, January 15, 2015

"2G Spectrum Scam Case". =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) |

                                                                  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:

In  the  year  2008,  during  the   tenure   of   the   then   Minister   of
Telecommunications, Unified Access Services Licenses ("UASL") were  granted.
 After sometime, an information was  disclosed  to  the  Central  Bureau  of
Investigation (CBI) alleging various forms of  irregularities  committed  in
connection with the grant of the said UASL which resulted in huge losses  to
the public exchequer.  On the basis of  such  source  information,  the  CBI
registered a case bearing RC DAI 2009 A 0045 on 21st October, 2009.   It  is
now widely known as "2G  Spectrum  Scam  Case".   The  case  was  registered
against unknown officers of the Department of  Telecommunications  (DOT)  as
well as unknown private persons and companies.

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.

Challenging the order of the Delhi High  Court,  CPIL  filed  Special  Leave
Petition before this Court under Article 136 of the Constitution  of  India.
At that time, another petitioner, Dr.Subramanian Swamy, directly  approached
the Supreme Court by way  of  a  writ  petition  under  Article  32  of  the
Constitution of India seeking almost the same reliefs on  similar  kinds  of
allegations.  Leave was granted in the said SLP, converting it into a  civil
appeal.  Said civil appeal and writ petition  were  taken  up  together  for
analogous hearing.  On 16th December, 2010, a  detailed  interim  order  was
passed in the civil appeal inter alia giving the following directions:
"a.  The CBI  shall  conduct  thorough  investigation  into  various  issues
highlighted in the report of the Central  Vigilance  Commission,  which  was
forwarded to the Director, CBI vide letter dated 12.10.2009 and  the  report
of the CAG, who have prima facie found serious irregularities in  the  grant
of licences to 122 applicants, majority of whom are said to  be  ineligible,
the blatant violation of the terms and conditions of licences and huge  loss
to the public exchequer  running  into  several  thousand  crores.  The  CBI
should also probe how licences were granted to large  number  of  ineligible
applicants and who was responsible for the same and why  the  TRAI  and  the
DoT  did  not  take  action  against  those   licensees   who   sold   their
stakes/equities for many thousand crores and also against those  who  failed
to fulfill  roll  out  obligations  and  comply  with  other  conditions  of
licence.

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

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 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
The CBI registered another RC being RC DAI 2011 A  0024  on  17th  November,
2011 with regard to alleged irregularities in grant of  additional  spectrum
in the year 2002 during the tenure of late Shri Pramod Mahajan  as  Minister
of Communications.  In this RC, apart from Shri Pramod Mahajan,  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.

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."

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.

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  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.

As pointed above, on the basis of the outcome of the  aforesaid  inquiry,  a
regular case was registered on 17.11.2011 for the offences punishable  under
Sections 120-B IPC r/w 13 (2) and 13 (1)(d) of the Prevention of  Corruption
Act, 1988 (for short, 'PC Act').  It was  against  Mr.  Shyamal  Ghosh,  Mr.
J.R. Gupta and the three Cellular  Companies,  names  whereof  have  already
been mentioned above.  The  main  allegation  is  that  additional  spectrum
beyond 6.2 MHz upto 10 MHz (paired) was approved at  an  additional  revenue
share at the rate of 1% only, meaning thereby the  said  additional  revenue
should have been at a higher  rate.   As  per  the  investigation,  Cellular
Operators Association of India (COAI) had made a  request  to  DoT,  in  the
year 2001, for allocating additional  spectrum  particularly  in  Delhi  and
Mumbai service areas.  On this, Technical Committee  was  constituted  which
gave its report on 21.11.2001 recommending therein  that  6.2  MHz  spectrum
was sufficient for a subscriber based out of about 9 lacs  per  operator  in
service  areas  like  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) 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.

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
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.

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
The matter was taken up by the Special Judge on 19th  March,  2013  for  the
purposes of issuance of summons to the accused persons in the  said  charge-
sheet (CC No.101/12).  The learned Special Judge passed  orders  dated  19th
March, 2013 recording his satisfaction to the effect that there  was  enough
incriminating material on record to proceed  against  the  accused  persons.
At the same time, the learned Special Judge also found that Mr.Sunil  Bharti
Mittal was Chairman-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.

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.

Before proceeding to record the submissions of the learned counsel  for  the
appellants as well as the counsel opposite, it  becomes  necessary  to  take
note of the brief order 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.

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.

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.

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 be attributed  and
imputed to them.  Consequently, I find enough material on record to  proceed
against them also.

Accordingly, I take cognizance of the case.   Issue  summons  to  all  seven
accused for 11.04.2013."

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
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  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.

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".  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.

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  reliance  upon  the
decision of this Court in Iridium India Telecom  Ltd.  v.  Motorola  Inc[2].
He further submitted that merely on the basis of the appellant's  status  in
the company, it could not be presumed that it is the appellant who became  a
party  to  the  alleged  conspiracy,  as  was  held  in  Maharashtra   State
Electricity Distribution  Co.  Ltd.  v.  Datar  Switchgear  Ltd.[3]  in  the
following manner:
"27. A bare perusal  of  the  complaint  shows  that  the  gravamen  of  the
allegation  is  that  a  fabricated  document   containing   the   offending
endorsement was tendered in evidence before the Arbitral Tribunal on  behalf
of MSEB by Accused 6, who was in charge of Shirpur Section.  It  is  evident
from the aforeextracted paragraphs of the complaint that other accused  have
been named in the complaint because, according  to  the  complainant,  MSEB,
Accused  1  was  acting  under  their  control  and  management.  It   bears
repetition  that  the  only  averment  made  against  Appellant  2  is  that
Appellant 1 i.e. MSEB  was  acting  under  the  control  and  management  of
Appellant 2 along with other three accused. There is  no  denying  the  fact
that Appellant 2 happened to be the Chairman of MSEB at  the  relevant  time
but it is a settled proposition of law that one cannot  draw  a  presumption
that a Chairman of a company is responsible for all acts committed by or  on
behalf of the company. In the entire body  of  the  complaint  there  is  no
allegation that Appellant 2 had personally participated in  the  arbitration
proceedings or was monitoring them in his capacity as the Chairman  of  MSEB
and it was at his instance that the subject interpolation was made  in  Ext.
C-64.

                          xx          xx         xx

In this regard, it would be useful to advert to the observations made  by  a
three-Judge Bench of this Court in S.M.S. Pharmaceuticals  (2005)8  SCC  89:
(SCC p. 98, para 8)

"8. ... There is no universal rule that  a  Director  of  a  company  is  in
charge of its everyday affairs. We have discussed about the  position  of  a
Director in a company in order to illustrate the  point  that  there  is  no
[pic]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 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."

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 against. However, reasons given  in  the  impugned
order, according to the  learned  senior  counsel,  are  totally  extraneous
amounting to wrong approach in law.

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.

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  his  submission  referred  certain
judgments, which we shall discuss at the appropriate stage.

      The Arguments: Respondents
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 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.

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  appellants  as  well.   He  even  submitted  that  in  the  absence  of
individual accused persons, who were in charge of the affairs of  the  three
accused companies, it may become difficult to proceed  against  the  accused
companies alone as it was a mens rea  offence.   He  also  relied  upon  the
following judgments to support the impugned order, with the  plea  that  the
trial court was invested with requisite powers to summon the appellants:

1.    M.C. Mehta (Taj Corridor scam) v. Union of India[6]

"30. At the outset, we may state that this Court has  repeatedly  emphasised
in the above judgments that in Supreme Court monitored cases this  Court  is
concerned with ensuring proper and honest performance of  its  duty  by  CBI
and that this Court is not concerned with the merits of the  accusations  in
investigation, which are to be determined at the trial on the filing of  the
charge-sheet in the competent court, according  to  the  ordinary  procedure
prescribed by law. Therefore, the question which we have to  decide  in  the
present case is whether the administrative hierarchy of officers in CBI,  in
the present case, have  performed  their  duties  in  a  proper  and  honest
manner."

2.    Kishun Singh v. State of Bihar[7]

"13. The question then is whether de hors  Section  319  of  the  Code,  can
similar power be traced to any other provision  in  the  Code  or  can  such
power be implied from the scheme of the Code? We have  already  pointed  out
earlier the two alternative modes in which the Criminal Law can  be  set  in
motion; by the filing of information with the police under  Section  154  of
the Code or upon receipt of a complaint or information by a Magistrate.  The
former would lead to investigation by the police  and  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 [pic]involved, it is its duty  to  proceed  against  those
persons' by summoning them because 'the summoning of the additional  accused
is part  of  the  proceeding  initiated  by  its  taking  cognizance  of  an
offence'. Even after the present Code came into force,  the  legal  position
has not undergone a change; on the contrary the  ratio  of  Dubey  case  was
affirmed in Hareram Satpathy v. Tikaram Agarwala.  (1978) 4 SCC 58 Thus  far
there is no difficulty.

3.    Dharam Pal v. State of Haryana[8]

"40. In that view of the matter, we have no hesitation in agreeing with  the
views expressed in Kishun Singh case  (1993) 2  SCC  16  that  the  Sessions
Court has jurisdiction on committal of a case to it, to take  cognizance  of
the offences of the persons not named as offenders but whose  complicity  in
the case would be evident from the materials  available  on  record.  Hence,
even without recording evidence,  upon  committal  under  Section  209,  the
Sessions Judge may summon those persons shown in  column  2  of  the  police
report to stand trial along with 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."

He also referred to the decision in the case  of  Lee  Kun  Hee,  President,
Samsung Corpn., South Korea v. State of Uttar Pradesh[9] wherein this  Court
has set down the limits of High Court's power under Section 482 of the  Code
to interfere with summoning orders passed by the trial court, as follows:
"10. JCE Consultancy filed a criminal complaint (Complaint No. 30  of  2005)
under Sections 403, 405, 415, 418, 420 and 423 read with Sections 120-B  and
34 of the Penal Code,  1860  before  the  VIIth  Additional  Chief  Judicial
Magistrate, Ghaziabad. In the complaint  filed  by  Shaikh  Allauddin  Pakir
Maiddin, the  sole  proprietor  of  JCE  Consultancy,  Samsung,  Dubai,  was
impleaded as Accused  1  (Appellant  5  herein);  Byung  Woo  Lee,  Managing
Director of  Samsung,  Dubai,  was  impleaded  as  Accused  2  (Appellant  3
herein); Lee Kun Hee,  President,  Samsung  Corporation,  was  impleaded  as
Accused 3 (Appellant 1 herein); Yon  Jung  Yung,  Vice-President  and  Chief
Executive  Officer,  Samsung  Corporation,  was  impleaded  as   Accused   4
(Appellant 2 herein); Dong Kwon Byon, ex-Managing Director, Samsung,  Dubai,
was impleaded as  Accused  5  (Appellant  4  herein);  S.C.  Baek,  [pic]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.

                       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 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 [pic]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  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 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  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."

He concluded his submission by reiterating  that  when  it  was  a  case  of
circumstantial evidence which appeared on record  in  abundance,  the  trial
court was right in summoning the appellants and in fact, judgment in  Keshav
Mahindra v. State 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.

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
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 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
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 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
challenged. Therefore, we deem it unnecessary  to  go  into  this  question,
which position was even conceded by all the counsel appearing before us.

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:
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 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.    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.

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
The moot question is whether the aforesaid proposition, to  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.

First case which needs to be discussed is Iridium India (supra).  Before  we
discuss the facts of this case, it would be relevant to point out  that  the
question as to whether a company could be prosecuted for  an  offence  which
requires mens rea had been earlier referred to in a  Constitution  Bench  of
five Judges in the  case  of  Standard  Chartered  Bank  v.  Directorate  of
Enforcement[11].  The Constitution Bench had held  that  a  company  can  be
prosecuted and convicted for an offence which requires  a  minimum  sentence
of imprisonment.   In  para  8  of  the  judgment,  the  Constitution  Bench
clarified that the Bench is not  expressing  any  opinion  on  the  question
whether a corporation could be attributed with requisite mens rea  to  prove
the guilt.  Para 8 reads as under:
"8.  It is only in a case requiring mens rea, a question  arises  whether  a
corporation could be attributed with requisite mens rea to prove the  guilt.
 But as we are not concerned with this question in these proceedings, we  do
not express any opinion on that issue."


In  Iridium  India  (supra),  the  aforesaid  question  fell  directly   for
consideration, namely, whether a company could be prosecuted for an  offence
which requires mens rea and discussed this aspect at length, taking note  of
the law that 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.

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 [pic]deceive, I  apprehend,  according
to  the  authorities  that  Viscount  Caldecote,  L.C.J.,  has  cited,   his
knowledge and intention must be imputed to the body corporate."

61. The principle has been reiterated  by  Lord  Denning  in  Bolton  (H.L.)
(Engg.) Co. Ltd. v. T.J. Graham & Sons Ltd.  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 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."

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)

"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."

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.

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 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:

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.

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 incorporating such a provision.

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:
      1.    Jethsur Surangbhai v. State of Gujarat[12]

"9.   With due respect what the High Court seems to have missed is  that  in
a case like this where there was serious defalcation of  the  properties  of
the Sangh, unless the prosecution proved that there  was  a  close  cohesion
and collusion between all the accused which formed the subject matter  of  a
conspiracy, it would be difficult to prove  the  dual  charges  particularly
against the appellant (A-1). The charge of  conspiracy  having  failed,  the
most material and  integral  part  of  the  prosecution  story  against  the
appellant disappears. The only ground on the basis of which the  High  Court
has convicted him is that as he was the Chairman of the Managing  Committee,
he  must  be  held  to  be  vicariously  liable  for  any  order  given   or
misappropriation committed by the other accused. The  High  Court,  however,
has not referred to the concept of vicarious liability but the  findings  of
the High Court seem to indicate that this was the central idea in  the  mind
of the High Court for convicting the appellant. In a criminal case  of  such
a serious nature mens  rea  cannot  be  excluded  and  once  the  charge  of
conspiracy failed the onus lay on the  prosecution  to  prove  affirmatively
that the appellant was  directly  and  personally  connected  with  acts  or
omissions pertaining to Items 2, 3 and 4. It is conceded by Mr  Phadke  that
no such direct evidence is forthcoming and he tried to  argue  that  as  the
appellant was Chairman of the Sangh and used  to  sign  papers  and  approve
various tenders, even as a matter of routine he should have acted with  care
and caution and his negligence would be a positive proof  of  his  intention
to commit the offence. We are however unable to  agree  with  this  somewhat
broad statement of the law. In the absence of a  charge  of  conspiracy  the
mere fact that [pic]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 then all members of the Committee viz. Tehsildar and other  nominated
members, would be equally liable because all of  them  participated  in  the
deliberations of the meetings of the Committee, a conclusion which  has  not
even been suggested by  the  prosecution.  As  Chairman  of  the  Sangh  the
appellant had to deal with a large variety of matters and it  would  not  be
humanly possible for him to analyse and go into the details of  every  small
matter in order to find out whether there has been any  criminal  breach  of
trust. In fact, the hero of the entire show seems  to  be  A-3  who  had  so
stage-managed the drama as to shield his guilt and bring  the  appellant  in
the forefront. But that by itself would not be conclusive  evidence  against
the appellant. There is nothing to show that  A-3  had  either  directly  or
indirectly  informed  the  appellant  regarding  the  illegal  purchase   of
fertilisers or the missing of the five oil engines which came to light  much
later during the course of the audit. Far from  proving  the  intention  the
prosecution has failed to prove that the  appellant  had  any  knowledge  of
defalcation of Items 2 to 4. In fact, so far as item 3  is  concerned,  even
Mr Phadke  conceded  that  there  is  no  direct  evidence  to  connect  the
appellant."


      2.    Sham Sunder v. State of Haryana[13]

"9. But we are concerned with a criminal  liability  under  penal  provision
and not a civil liability. The penal provision must  be  strictly  construed
in the first place. Secondly, there is no vicarious  liability  in  criminal
law unless the statute takes that also within its fold. Section 10 does  not
provide for such liability. It does not make all  the  partners  liable  for
the offence whether they do business or not."


      3.    Hira Lal Hari Lal Bhagwati v. CBI [14]

"30. In our view, under the penal law, there  is  no  concept  of  vicarious
liability unless the said statute covers the same within its ambit.  In  the
instant case, the said law which prevails in  the  field  i.e.  the  Customs
Act, 1962 the appellants have been thereinunder wholly  discharged  and  the
GCS granted immunity from prosecution."


      4.    Maksud Saiyed v. State of Gujarat[15]

"13. Where a jurisdiction is exercised on  a  complaint  petition  filed  in
terms of Section 156(3) or Section 200 of the Code  of  Criminal  Procedure,
the Magistrate is required to apply  his  mind.  The  Penal  Code  does  not
contain any provision for attaching vicarious liability on the part  of  the
Managing Director or the Directors of the Company when the  accused  is  the
Company. The learned Magistrate failed to  pose  unto  himself  the  correct
question viz. as to whether the  complaint  petition,  even  if  given  face
value and taken to be correct in its entirety, would lead to the  conclusion
that the respondents herein were personally  liable  for  any  offence.  The
Bank is a body corporate. Vicarious liability of the Managing  Director  and
Director would arise provided any provision exists in  that  behalf  in  the
statute. Statutes indisputably must contain provision fixing such  vicarious
liabilities. Even for the said purpose, it is obligatory on the part of  the
complainant  to  make  requisite  allegations  which   would   attract   the
provisions constituting vicarious liability."


      5.    R. Kalyani v. Janak C. Mehta[16]

"32. Allegations contained in the FIR are for commission of  offences  under
a general statute. A vicarious liability can be fastened only by  reason  of
a provision of a statute and not otherwise. For the said  purpose,  a  legal
fiction has to be created. Even under a special statute when  the  vicarious
criminal liability is fastened on a person on the premise  that  he  was  in
charge of the affairs  of  the  company  and  responsible  to  it,  all  the
ingredients laid down under the statute must be fulfilled. A  legal  fiction
must be confined to the object and purport for which it has been created."


      6.    Sharon Michael v. State of T.N.[17]

"16.  The  first  information  report  contains  details  of  the  terms  of
contract entered into by and between  the  parties  as  also  the  mode  and
manner in which they were implemented. Allegations have  been  made  against
the appellants in  relation  to  execution  of  the  contract.  No  case  of
criminal misconduct on their part has been made out before the formation  of
the contract. There is nothing to show that the appellants herein  who  hold
different positions in the appellant  Company  made  any  representation  in
their personal capacities and, thus, they cannot be made vicariously  liable
only because they are employees of the Company."




7.          Keki Hormusji Gharda v. Mehervan Rustom Irani[18]

"16. We have noticed hereinbefore that despite of the said road being  under
construction, the first respondent went to the police  station  thrice.  He,
therefore, was not obstructed from going to the police station. In  fact,  a
firm action had been taken by the authorities. The workers  were  asked  not
to do any work on the road. We, therefore, fail to appreciate that  how,  in
a situation of this nature, the Managing Director and the Directors  of  the
Company as also the Architect can be  said  to  have  committed  an  offence
under Section 341 IPC.

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 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 [pic]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 exercise  its  discretionary  jurisdiction  under
Section 482 of the Code of Criminal Procedure."

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."

We have already mentioned above that even if the CBI did not  implicate  the
appellants, if  there  was/is  sufficient  material  on  record  to  proceed
against these persons as well, the Special Judge is duly empowered  to  take
cognizance 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

upon information received from any person    other than  a  police  officer,
or upon his own  knowledge, that such offence has been  committed.

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 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.

Cognizance of an offence and prosecution of an offender  are  two  different
things.  Section 190 of the Code empowered taking cognizance of  an  offence
and not to deal with offenders. Therefore, cognizance can be taken  even  if
offender is  not  known  or  named  when  the  complaint  is  filed  or  FIR
registered.  Their names may transpire during investigation or afterwards.

Person who has not joined as accused in the charge-sheet can be summoned  at
the stage of taking cognizance under Section 190 of the Code.  There  is  no
question of applicability of Section 319 of the  Code  at  this  stage  (See
SWIL Ltd. v. State of Delhi[21]). It is also trite that even if a person  is
not named as an accused by the police in the  final  report  submitted,  the
Court would be justified in taking cognizance of the offence and  to  summon
the accused if it feels that the  evidence  and  material  collected  during
investigation justifies prosecution of the accused (See Union  of  India  v.
Prakash P. Hinduja and another[22]).  Thus, the Magistrate is  empowered  to
issue process against some other person, who has  not  been  charge-sheeted,
but there has to be sufficient material in the  police  report  showing  his
involvement.  In that case,  the  Magistrate  is  empowered  to  ignore  the
conclusion arrived at by  the  investigating  officer  and  apply  his  mind
independently  on  the  facts  emerging  from  the  investigation  and  take
cognizance of the case.  At the same time, it is  not  permissible  at  this
stage  to  consider  any  material  other  than  that   collected   by   the
investigating officer.


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.

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.

However, the words "sufficient grounds  for  proceeding"  appearing  in  the
Section are of immense importance.  It is these words  which  amply  suggest
that an opinion is to be formed only after  due  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.

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 out of SLP (Crl.) Nos. 3326-3327 of  2013
filed by Telecom Watchdog are dismissed.

      Epilogue


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.
                                                                (A.K. SIKRI)

NEW DELHI;
JANUARY 09, 2015.



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

            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 ]


























-----------------------
[1]
      (2012) 3 SCC 1
[2]   (2011) 1 SCC 74
[3]   (2010) 10 SCC 479
[4]   (2008) 5 SCC 662
[5]   (2012) 5 SCC 661
[6]   (2007) 1 SCC 110
[7]   (1993) 2 SCC 16
[8]   (2014) 3 SCC 306
[9]   (2012) 3 SCC 132
[10]  (1996) 6 SCC 129
[11]  (2005) 4 SCC 530
[12]  (1984) Supp. SCC 207
[13]  (1989) 4 SCC 630
[14]  (2003) 5 SCC 257
[15]  (2008) 5 SCC 668
[16]  (2009) 1 SCC 516
[17]  (2009) 3 SCC 375
[18]  (2009) 6 SCC 475
[19]  (2013) 4 SCC 505
[20]  (2008) 2 SCC 492
[21]  (2001) 6 SCC 670
[22]  (2003) 6 SCC 195

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