2015 (9) TMI 1339 - SC - Indian Laws

Powers to summon a person who is no accused but summon as an accused person - Power of Magistrate - the 2G Spectrum Scam Case - Irregularities in connection with the grant of Unified Access Services Licenses (UASL) - huge losses to the public exchequer - 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. - Held 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 (c) 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. 2008 (1) TMI 618 - SUPREME COURT OF INDIA 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. - 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. 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. 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. 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 appeal of Mr. Sunil Bharti Mittal and Ravi Ruia respectively are, accordingly, allowed and order summoning these appellants is set aside. - The appeals arising filed by Telecom Watchdog are dismissed.

Summary

Issues Involved:
1. Alleged irregularities in the grant of Unified Access Services Licenses (UASL) and additional spectrum.
2. Court-monitored investigation by the Central Bureau of Investigation (CBI).
3. Criminal liability of corporate entities and their directors.
4. Summoning of individuals not named in the charge-sheet.
5. Application of the principle of "alter ego" in criminal liability.
6. Vicarious liability in criminal law.

Detailed Analysis:

1. Alleged Irregularities in the Grant of UASL and Additional Spectrum:
The case revolves around the alleged irregularities in the grant of UASL during the tenure of the then Minister of Telecommunications in 2008, leading to substantial losses to the public exchequer. The CBI registered a case (RC DAI 2009 A 0045) on October 21, 2009, popularly known as the "2G Spectrum Scam Case." The investigation was extended to cover the period from 2001 to 2007, including the grant of additional spectrum in 2002 during the tenure of late Shri Pramod Mahajan as Minister of Communications.

2. Court-Monitored Investigation by the CBI:
The Supreme Court directed the CBI to conduct a thorough investigation into the irregularities highlighted in the reports of the Central Vigilance Commission and the Comptroller and Auditor General. The investigation was to focus on the loss caused to the public exchequer and the corresponding gain to the licensees/service providers. The Court also set up a Special Court for the trial of the 2G case and appointed a Senior Advocate as the Special Public Prosecutor.

3. Criminal Liability of Corporate Entities and Their Directors:
The CBI charge-sheeted Mr. Shyamal Ghosh, the then Secretary (Telecom), and three Cellular Companies: M/s Bharti Cellular Limited, M/s Hutchison Max Telecom (P) Limited, and M/s Sterling Cellular Limited. The main allegation was that additional spectrum beyond 6.2 MHz up to 10 MHz was approved at an additional revenue share of 1% only, causing a cumulative loss of Rs. 846.44 crores to the Government Exchequer. The Special Judge, while taking cognizance of the case, also issued summons to Mr. Sunil Bharti Mittal, Mr. Asim Ghosh, and Mr. Ravi Ruia, who were not named in the charge-sheet but were deemed to be in control of the respective companies.

4. Summoning of Individuals Not Named in the Charge-Sheet:
The appellants, Mr. Sunil Bharti Mittal and Mr. Ravi Ruia, challenged the order summoning them as accused persons. The Supreme Court noted that while the trial court has the power to summon individuals not named in the charge-sheet if sufficient material is found, the Special Judge in this case did not record his satisfaction based on material evidence. Instead, the summoning was based on the incorrect legal principle of "alter ego."

5. Application of the Principle of "Alter Ego" in Criminal Liability:
The principle of "alter ego" was applied in reverse by the Special Judge, attributing the acts of the company to the individuals controlling it. The Supreme Court clarified that while the criminal intent of the "alter ego" of the company can be imputed to the company, the reverse is not true unless there is specific statutory provision or sufficient evidence of the individual's active role coupled with criminal intent.

6. Vicarious Liability in Criminal Law:
The Supreme Court reiterated that there is no vicarious liability in criminal law unless specifically provided by statute. The Court cited several judgments to emphasize that an individual can only be made vicariously liable if there is a statutory provision to that effect or if there is sufficient evidence of the individual's direct involvement in the criminal act.

Conclusion:
The Supreme Court set aside the order summoning Mr. Sunil Bharti Mittal and Mr. Ravi Ruia, noting that the Special Judge did not apply the correct legal principles and did not record his satisfaction based on material evidence. The Court allowed the Special Judge to re-examine the material on record and, if sufficient incriminating material is found, to pass appropriate orders. The Court also clarified that if sufficient evidence surfaces during the trial, the Special Judge can exercise his powers under Section 319 of the Code of Criminal Procedure to summon the appellants.